##### Table of Contents



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 September 30, 2002

OR

/   / 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 /   /

The number of shares outstanding of each of the Registrants classes of common
stock on November 5, 2002 was as follows:

|             |  |                  
|------------ |  | -----------------
|Common Stock |  | 39,009,078 shares

Exhibit index   Page 45
Page 1 of 47





---

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 Results Of Operations And Financial Condition
|                                                   | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                                                   | Item 4. Controls and Procedures                                                              
|PART II  OTHER INFORMATION                       
|                                                   | Item 1 Legal Proceedings                                                                     
|                                                   | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                        
|CERTIFICATIONS                                    
|INDEX TO EXHIBITS                                 
|Form of Supplemental Benefit Agreement            
|Statement Re:Computation of Earnings Per Share    
|Computation of Ratios of Earnings to Fixed Charges



---



##### Table of Contents



INDEX

|                               |  |                                                                                       |    |                                                                                                                                               |    |          |    | 
|------------------------------ |  | ------------------------------------------------------------------------------------- | -- | --------------------------------------------------------------------------------------------------------------------------------------------- | -- | -------- | -- | 
|                               |  |                                                                                       |    |                                                                                                                                               |    | Page No.
|                               |  |                                                                                       |    |                                                                                                                                               |    |         
|PART I
 FINANCIAL INFORMATION |  |                                                                                       | 4  |                                                                                                                                              
|Item 1.                        |  | Financial Statements                                                                  |    |                                                                                                                                               | 4  |         
|                               |  |                                                                                       |    | Consolidated Balance Sheets
September 30, 2002 (Unaudited) and December 31, 2001                                                              |    |          | 4  | 
|                               |  |                                                                                       |    | Consolidated Statements of Income (Unaudited)
For the Three and Nine Months Ended September 30, 2002 and 2001                                 |    |          | 6  | 
|                               |  |                                                                                       |    | Consolidated Statements of Comprehensive Income (Unaudited)
For the Three and Nine Months Ended September 30, 2002 and 2001                   |    |          | 7  | 
|                               |  |                                                                                       |    | Consolidated Statements of Stockholders Equity
For the Nine Months Ended September 30, 2002 (Unaudited) and
the Year Ended December 31, 2001 |    |          | 8  | 
|                               |  |                                                                                       |    | Consolidated Statements of Cash Flows (Unaudited)
For the Nine Months Ended September 30, 2002 and 2001                                       |    |          | 9  | 
|                               |  |                                                                                       |    | Notes to Consolidated Financial Statements
(Unaudited)                                                                                        |    |          | 11 | 
|Item 2.                        |  | Managements Discussion and Analysis of Results of Operations and
Financial Condition |    |                                                                                                                                               | 24 |         
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                            |    |                                                                                                                                               | 38 |         
|Item 4.                        |  | Controls and Procedures                                                               |    |                                                                                                                                               | 40 |         
|PART II
 OTHER INFORMATION    |  |                                                                                       | 41 |                                                                                                                                              
|Item 1.                        |  | Legal Proceedings                                                                     |    |                                                                                                                                               | 41 |         
|Item 6.                        |  | Exhibits and Reports on Form 8-K                                                      |    |                                                                                                                                               | 41 |         
|Signatures                     |  |                                                                                       |    |                                                                                                                                               | 42 |         
|Certifications                 |  |                                                                                       |    |                                                                                                                                               | 43 |         
|Index to Exhibits              |  |                                                                                       | 45 |                                                                                                                                              

2



---



##### Table of Contents



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 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 laws and
regulations which may affect the relative tax advantages of some of our
products; (g) increasing competition in the sale of insurance and annuities and
the recruitment of sales representatives; (h) regulatory changes or actions,
including those relating to regulation of insurance products and of insurance
companies; (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 for derivatives and business combinations,
goodwill and other intangibles and purchase accounting adjustments; (l) our
ability to integrate the business and operations of acquired entities; (m)
expected life and annuity product margins; (n) the impact of anticipated
investment transactions; and (o) unanticipated litigation or regulatory
investigations.

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



---



##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1. Financial Statements




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

|                                     |                                                     |                           |                   |         |            |               |         |              |            |            |  | 
|------------------------------------ | --------------------------------------------------- | ------------------------- | ----------------- | ------- | ---------- | ------------- | ------- | ------------ | ---------- | ---------- |  | 
|                                     |                                                     |                           |                   |         |            | September 30, |         | December 31,
|                                     |                                                     |                           |                   |         |            | 2002          |         | 2001        
|                                     |                                                     |                           |                   |         |            |               |         |             
|                                     |                                                     |                           |                   |         |            | (unaudited)   |         |              |            |           
|                                     |                                                     |                           |                   | Assets  |            |               |         |              |            |            |  | 
|Investments:                         |                                                     |                           |                   |         |            |               |         |             
|                                     | Securities available-for-sale at fair value:        |                           |                   |         |            |               |         |              |           
|                                     |                                                     | Fixed maturity securities |                   | $       | 12,809,328 |               |         | $            | 11,037,425 |           
|                                     |                                                     | Equity securities         |                   |         | 61,052     |               |         |              | 11,362     |           
|                                     |                                                     | Short-term investments    |                   |         | 23,714     |               |         |              | 14,881     |           
|                                     | Securities held for trading purposes at fair value: |                           |                   |         |            |               |         |              |           
|                                     |                                                     | Fixed maturity securities |                   |         | 1,857,324  |               |         |              | 2,175,106  |           
|                                     |                                                     | Equity securities         |                   |         |           |               |         |              | 12,013     |           
|                                     |                                                     | Short-term investments    |                   |         | 8,139      |               |         |              | 4,212      |           
|                                     | Mortgage loans                                      |                           |                   | 920,035 |            |               |         | 944,532      |           
|                                     | Real estate                                         |                           |                   | 1,257   |            |               |         | 1,405        |           
|                                     | Policy loans                                        |                           |                   | 496,614 |            |               |         | 506,318      |           
|                                     | Other investments                                   |                           |                   | 246,094 |            |               |         | 345,179      |           
|                                     |                                                     |                           |                   |         |            |               |         |             
|                                     |                                                     |                           | Total investments |         |            | 16,423,557    |         |              |            | 15,052,433 | 
|Cash and cash equivalents            |                                                     |                           | 98,771            |         |            |               | 179,376 |             
|Accrued investment income            |                                                     |                           | 189,476           |         |            |               | 174,238 |             
|Premiums, fees and other receivables |                                                     |                           | 14,991            |         |            |               | 9,920   |             
|Income taxes receivable              |                                                     |                           | 14,728            |         |            |               |        |             
|Reinsurance receivables              |                                                     |                           | 836,989           |         |            |               | 732,030 |             
|Deferred policy acquisition costs    |                                                     |                           | 783,404           |         |            |               | 642,680 |             
|Value of business acquired           |                                                     |                           | 503,237           |         |            |               | 583,829 |             
|Goodwill                             |                                                     |                           | 223,545           |         |            |               | 195,484 |             
|Property and equipment               |                                                     |                           | 77,406            |         |            |               | 83,221  |             
|Deferred income taxes                |                                                     |                           |                  |         |            |               | 12,140  |             
|Other assets                         |                                                     |                           | 313,385           |         |            |               | 305,416 |             
|Separate account assets              |                                                     |                           | 233,614           |         |            |               | 328,385 |             
|                                     |                                                     |                           |                   |         |            |               |         |             
|                                     |                                                     |                           | Total assets      |         | $          | 19,713,103    |         |              | $          | 18,299,152 | 
|                                     |                                                     |                           |                   |         |            |               |         |             

See accompanying notes to consolidated financial statements.

4



---



##### Table of Contents



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

|                      |                                                                                                                                                                                                   |                                         |                                      |                                            |            |               |            |              |            |   |            | 
|--------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------- | ------------------------------------ | ------------------------------------------ | ---------- | ------------- | ---------- | ------------ | ---------- | - | ---------- | 
|                      |                                                                                                                                                                                                   |                                         |                                      |                                            |            | September 30, |            | December 31,
|                      |                                                                                                                                                                                                   |                                         |                                      |                                            |            | 2002          |            | 2001        
|                      |                                                                                                                                                                                                   |                                         |                                      |                                            |            |               |            |             
|                      |                                                                                                                                                                                                   |                                         |                                      |                                            |            | (unaudited)   |            |              |            |  
|                      |                                                                                                                                                                                                   |                                         | Liabilities and Stockholders Equity |                                            |            |               |            |              |            |   |           
|Liabilities:          |                                                                                                                                                                                                   |                                         |                                      |                                            |            |               |            |             
|                      | Policy reserves and policyowner funds:                                                                                                                                                            |                                         |                                      |                                            |            |               |            |              |           
|                      |                                                                                                                                                                                                   | Future life and annuity policy benefits |                                      | $                                          | 15,844,975 |               |            | $            | 15,102,001 |  
|                      |                                                                                                                                                                                                   | Policyowner funds                       |                                      |                                            | 1,184,917  |               |            |              | 432,941    |  
|                      |                                                                                                                                                                                                   |                                         |                                      |                                            |            |               |            |             
|                      |                                                                                                                                                                                                   |                                         | 17,029,892                           |                                            |            |               | 15,534,942 |             
|                      | Accrued expenses and other liabilities                                                                                                                                                            |                                         |                                      | 273,394                                    |            |               |            | 512,500      |           
|                      | Dividends payable to policyowners                                                                                                                                                                 |                                         |                                      | 303,654                                    |            |               |            | 221,224      |           
|                      | Policy and contract claims                                                                                                                                                                        |                                         |                                      | 39,588                                     |            |               |            | 33,147       |           
|                      | Income taxes payable                                                                                                                                                                              |                                         |                                      |                                           |            |               |            | 45,809       |           
|                      | Deferred income taxes                                                                                                                                                                             |                                         |                                      | 77,330                                     |            |               |            |             |           
|                      | Notes payable                                                                                                                                                                                     |                                         |                                      | 499,110                                    |            |               |            | 384,628      |           
|                      | Separate account liabilities                                                                                                                                                                      |                                         |                                      | 233,614                                    |            |               |            | 328,385      |           
|                      |                                                                                                                                                                                                   |                                         |                                      |                                            |            |               |            |             
|                      |                                                                                                                                                                                                   |                                         |                                      | Total liabilities                          |            |               | 18,456,582 |              |            |   | 17,060,635 | 
|Stockholders equity: |                                                                                                                                                                                                   |                                         |                                      |                                            |            |               |            |             
|                      | Preferred Stock, no par value, 20,000,000 shares
authorized, none issued                                                                                                                          |                                         |                                      |                                           |            |               |            |             |           
|                      | Common Stock, no par value, 230,000,000 shares
authorized; 43,650,431 shares issued and
39,005,729 shares outstanding in 2002;
43,505,998 shares issued and 41,759,450 shares
outstanding in 2001 |                                         |                                      | 43,650                                     |            |               |            | 43,506       |           
|                      | Additional paid-in capital                                                                                                                                                                        |                                         |                                      | 1,179,000                                  |            |               |            | 1,177,688    |           
|                      | Accumulated other comprehensive income                                                                                                                                                            |                                         |                                      | 75,731                                     |            |               |            | 12,669       |           
|                      | Unearned compensation                                                                                                                                                                             |                                         |                                      | (476                                       | )          |               |            | (727         | )         
|                      | Unallocated ESOP shares                                                                                                                                                                           |                                         |                                      | (2,746                                     | )          |               |            | (224         | )         
|                      | Retained earnings                                                                                                                                                                                 |                                         |                                      | 117,854                                    |            |               |            | 62,187       |           
|                      | Treasury stock, at cost (4,644,702 shares in 2002 and
1,746,548 shares in 2001)                                                                                                                   |                                         |                                      | (156,492                                   | )          |               |            | (56,582      | )         
|                      |                                                                                                                                                                                                   |                                         |                                      |                                            |            |               |            |             
|                      |                                                                                                                                                                                                   |                                         |                                      | Total stockholders equity                 |            |               | 1,256,521  |              |            |   | 1,238,517  | 
|                      |                                                                                                                                                                                                   |                                         |                                      |                                            |            |               |            |             
|                      |                                                                                                                                                                                                   |                                         |                                      | Total liabilities and stockholders equity |            | $             | 19,713,103 |              |            | $ | 18,299,152 | 
|                      |                                                                                                                                                                                                   |                                         |                                      |                                            |            |               |            |             

See accompanying notes to consolidated financial statements.

5



---



##### Table of Contents






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

|                                                                      |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |            |         |  
|--------------------------------------------------------------------- | ------- | -------------------------------------------------------------------------------- | ------- | -------------------------- | ------- | ------------------------- | ------- | ---------- | ------- | ---- | --------- | ---------- | -------- | - | ------- | ---------- | ------- | -
|                                                                      |         |                                                                                  |         | For The Three Months Ended |         | For The Nine Months Ended
|                                                                      |         |                                                                                  |         | September 30,              |         | September 30,            
|                                                                      |         |                                                                                  |         | 2002                       |         | 2001                      |         | 2002       |         | 2001
|                                                                      |         |                                                                                  |         |                            |         |                           |         |            |         |     
|                                                                      |         |                                                                                  |         | (unaudited)               
|Revenues:                                                             |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|                                                                      |         | Insurance premiums                                                               |         | $                          | 78,501  |                           |         | $          | 92,522  |      |           | $          | 263,857  |   |         | $          | 221,401 |  
|                                                                      |         | Universal life and annuity product charges                                       |         |                            | 42,207  |                           |         |            | 47,407  |      |           |            | 124,392  |   |         |            | 106,520 |  
|                                                                      |         | Net investment income                                                            |         |                            | 252,388 |                           |         |            | 231,943 |      |           |            | 744,054  |   |         |            | 620,164 |  
|                                                                      |         | Realized/unrealized gains (losses) on investments                                |         |                            | (21,951 | )                         |         |            | (45,302 | )    |           |            | (122,574 | ) |         |            | (97,309 | )
|                                                                      |         | Other income                                                                     |         |                            | 20,634  |                           |         |            | 11,541  |      |           |            | 53,568   |   |         |            | 35,118  |  
|                                                                      |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|                                                                      |         |                                                                                  | 371,779 |                            |         |                           | 338,111 |            |         |      | 1,063,297 |            |          |   | 885,894 |           
|                                                                      |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|Benefits and expenses:                                                |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|                                                                      |         | Policyowner benefits                                                             |         |                            | 226,103 |                           |         |            | 195,845 |      |           |            | 660,035  |   |         |            | 505,692 |  
|                                                                      |         | Underwriting, acquisition and other expenses                                     |         |                            | 35,967  |                           |         |            | 40,800  |      |           |            | 115,421  |   |         |            | 107,255 |  
|                                                                      |         | Demutualization costs                                                            |         |                            | 722     |                           |         |            | 249     |      |           |            | 1,186    |   |         |            | 451     |  
|                                                                      |         | Restructuring costs                                                              |         |                            | 2,569   |                           |         |            | 6,527   |      |           |            | 10,780   |   |         |            | 6,527   |  
|                                                                      |         | Amortization of deferred policy acquisition
costs and value of business acquired |         |                            | 35,289  |                           |         |            | 31,270  |      |           |            | 103,452  |   |         |            | 86,512  |  
|                                                                      |         | Dividends to policyowners                                                        |         |                            | 24,377  |                           |         |            | 26,191  |      |           |            | 72,000   |   |         |            | 68,416  |  
|                                                                      |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|                                                                      |         |                                                                                  | 325,027 |                            |         |                           | 300,882 |            |         |      | 962,874   |            |          |   | 774,853 |           
|                                                                      |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|Income from continuing operations                                     |         |                                                                                  | 46,752  |                            |         |                           | 37,229  |            |         |      | 100,423   |            |          |   | 111,041 |           
|Interest expense                                                      |         |                                                                                  | 6,414   |                            |         |                           | 5,974   |            |         |      | 18,778    |            |          |   | 20,716  |           
|                                                                      |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|Income before income tax expense                                      |         |                                                                                  | 40,338  |                            |         |                           | 31,255  |            |         |      | 81,645    |            |          |   | 90,325  |           
|Income tax expense                                                    |         |                                                                                  | 13,848  |                            |         |                           | 9,745   |            |         |      | 25,978    |            |          |   | 28,716  |           
|                                                                      |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|Net income from continuing operations                                 |         |                                                                                  | 26,490  |                            |         |                           | 21,510  |            |         |      | 55,667    |            |          |   | 61,609  |           
|Cumulative effect of change in accounting for
derivatives, net of tax |         |                                                                                  |        |                            |         |                           |        |            |         |      |          |            |          |   | (8,236  | )         
|                                                                      |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|Net income                                                            |         | $                                                                                | 26,490  |                            |         | $                         | 21,510  |            |         | $    | 55,667    |            |          | $ | 53,373  |           
|                                                                      |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|Net income from continuing operations per common share:               |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|                                                                      | Basic   |                                                                                  | $       | 0.67                       |         |                           | $       | 0.52       |         |      | $         | 1.38       |          |   | $       | 1.74       |        
|                                                                      |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|                                                                      | Diluted |                                                                                  | $       | 0.66                       |         |                           | $       | 0.51       |         |      | $         | 1.36       |          |   | $       | 1.72       |        
|                                                                      |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|Net income per common share:                                          |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|                                                                      | Basic   |                                                                                  | $       | 0.67                       |         |                           | $       | 0.52       |         |      | $         | 1.38       |          |   | $       | 1.51       |        
|                                                                      |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|                                                                      | Diluted |                                                                                  | $       | 0.66                       |         |                           | $       | 0.51       |         |      | $         | 1.36       |          |   | $       | 1.49       |        
|                                                                      |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|Weighted average common shares outstanding:                           |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|                                                                      | Basic   |                                                                                  |         | 39,497,355                 |         |                           |         | 41,536,389 |         |      |           | 40,327,236 |          |   |         | 35,334,160 |        
|                                                                      |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           
|                                                                      | Diluted |                                                                                  |         | 39,835,426                 |         |                           |         | 42,060,929 |         |      |           | 40,812,121 |          |   |         | 35,825,884 |        
|                                                                      |         |                                                                                  |         |                            |         |                           |         |            |         |      |           |            |          |   |         |           

See accompanying notes to consolidated financial statements.

6



---



##### Table of Contents






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

|                                               |                                                                             |                                                                                                     |        |                            |         |                           |        |         |        |      |         |         |         |   |         |         |         |  
|---------------------------------------------- | --------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | ------ | -------------------------- | ------- | ------------------------- | ------ | ------- | ------ | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                                               |                                                                             |                                                                                                     |        | For The Three Months Ended |         | For The Nine Months Ended
|                                               |                                                                             |                                                                                                     |        | September 30,              |         | September 30,            
|                                               |                                                                             |                                                                                                     |        | 2002                       |         | 2001                      |        | 2002    |        | 2001
|                                               |                                                                             |                                                                                                     |        |                            |         |                           |        |         |        |     
|                                               |                                                                             |                                                                                                     |        | (unaudited)               
|Net income                                     |                                                                             | $                                                                                                   | 26,490 |                            |         | $                         | 21,510 |         |        | $    | 55,667  |         |         | $ | 53,373  |        
|Other comprehensive income (loss), before tax: |                                                                             |                                                                                                     |        |                            |         |                           |        |         |        |      |         |         |         |   |         |        
|                                               | Unrealized gains (losses) on securities:                                    |                                                                                                     |        |                            |         |                           |        |         |        |      |         |         |         |   |         |         |        
|                                               |                                                                             | Transfer related to unrealized gain (loss) on available-for-sale securities reclassified to trading |        |                            |        |                           |        |         |       |      |         |         |        |   |         |         | (430    | )
|                                               |                                                                             | Unrealized holding gains (losses) arising during period                                             |        |                            | 71,793  |                           |        |         | 66,784 |      |         |         | 39,933  |   |         |         | 64,444  |  
|                                               |                                                                             | Less: Reclassification adjustment for gains (losses)
included in net income                         |        |                            | (15,625 | )                         |        |         | (6,103 | )    |         |         | (57,085 | ) |         |         | (20,326 | )
|                                               |                                                                             |                                                                                                     |        |                            |         |                           |        |         |        |      |         |         |         |   |         |        
|                                               | Other comprehensive income gain (loss), before tax                          |                                                                                                     |        | 87,418                     |         |                           |        | 72,887  |        |      |         | 97,018  |         |   |         | 84,340  |        
|                                               | Income tax (expense) benefit related to items of other
comprehensive income |                                                                                                     |        | (30,596                    | )       |                           |        | (25,510 | )      |      |         | (33,956 | )       |   |         | (29,519 | )      
|                                               |                                                                             |                                                                                                     |        |                            |         |                           |        |         |        |      |         |         |         |   |         |        
|                                               |                                                                             |                                                                                                     | 56,822 |                            |         |                           | 47,377 |         |        |      | 63,062  |         |         |   | 54,821  |        
|                                               | Amounts attributable to:                                                    |                                                                                                     |        |                            |         |                           |        |         |        |      |         |         |         |   |         |         |        
|                                               |                                                                             | Change in accounting for derivatives                                                                |        |                            |        |                           |        |         |       |      |         |         |        |   |         |         | 2,661   |  
|                                               |                                                                             |                                                                                                     |        |                            |         |                           |        |         |        |      |         |         |         |   |         |        
|                                               | Other comprehensive income (loss), net of taxes                             |                                                                                                     |        | 56,822                     |         |                           |        | 47,377  |        |      |         | 63,062  |         |   |         | 57,482  |        
|                                               |                                                                             |                                                                                                     |        |                            |         |                           |        |         |        |      |         |         |         |   |         |        
|Comprehensive income                           |                                                                             | $                                                                                                   | 83,312 |                            |         | $                         | 68,887 |         |        | $    | 118,729 |         |         | $ | 110,855 |        
|                                               |                                                                             |                                                                                                     |        |                            |         |                           |        |         |        |      |         |         |         |   |         |        

See accompanying notes to consolidated financial statements.

7



---



##### Table of Contents






AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
September 30, 2002
($ in thousands)

|                              |                                                                                                     |   |              |       |         |   |               |         |               |   |             |        |          |   |             |      |          |   |               |        |   |   |         |         |       |   |          |          |   |   |           |          |  
|----------------------------- | --------------------------------------------------------------------------------------------------- | - | ------------ | ----- | ------- | - | ------------- | ------- | ------------- | - | ----------- | ------ | -------- | - | ----------- | ---- | -------- | - | ------------- | ------ | - | - | ------- | ------- | ----- | - | -------- | -------- | - | - | --------- | -------- | -
|                              |                                                                                                     |   |              |       |         |   |               |         |               |   | Accumulated |        |          |   |             |      |          |   |               |        |   |   |         |         |       |   |          |          |   |   |          
|                              |                                                                                                     |   |              |       |         |   | Additional    |         | Other         |   |             |        |          |   | Unallocated |      |          |   |               |        |   |   |         |         | Total
|                              |                                                                                                     |   |              |       |         |   | Paid-In       |         | Comprehensive |   | Unearned    |        | ESOP     |   | Retained    |      | Treasury |   | Stockholders'
|                              |                                                                                                     |   | Common Stock |       | Capital |   | Income (Loss) |         | Compensation  |   | Shares      |        | Earnings |   | Stock       |      | Equity  
|                              |                                                                                                     |   |              |       |         |   |               |         |               |   |             |        |          |   |             |      |         
|Balance at December 31, 2000  |                                                                                                     | $ | 30,011       |       |         | $ | 809,89        |         |               | $ | (17,188     | )      |          | $ | (146        | )    |          | $ | (683          | )      |   | $ | 6,067   |         |       | $ |         |          |   | $ | 827,955   |         
|2001:                         |                                                                                                     |   |              |       |         |   |               |         |               |   |             |        |          |   |             |      |          |   |               |        |   |   |         |         |       |   |          |          |   |   |           |         
|                              | Net income                                                                                          |   |              |      |         |   |               |        |               |   |             |       |          |   |             |     |          |   |               |       |   |   |         | 72,907  |       |   |          |         |   |   |           | 72,907   |  
|                              | Change in accounting for derivatives                                                                |   |              |      |         |   |               |        |               |   |             | 2,661  |          |   |             |     |          |   |               |       |   |   |         |        |       |   |          |         |   |   |           | 2,661    |  
|                              | Transfer related to unrealized gain (loss) on
available-for-sale securities reclassified
to trading |   |              |      |         |   |               |        |               |   |             | (430   | )        |   |             |     |          |   |               |       |   |   |         |        |       |   |          |         |   |   |           | (430     | )
|                              | Net unrealized gain (loss) on securities                                                            |   |              |      |         |   |               |        |               |   |             | 35,891 |          |   |             |     |          |   |               |       |   |   |         |        |       |   |          |         |   |   |           | 35,891   |  
|                              | Net unrealized gain (loss) on derivatives
designated as cash flow hedges                            |   |              |      |         |   |               |        |               |   |             | (5,933 | )        |   |             |     |          |   |               |       |   |   |         |        |       |   |          |         |   |   |           | (5,933   | )
|                              | Stock issued under various incentive
plans, net of forfeitures                                      |   |              | 206   |         |   |               | 5,861   |               |   |             |       |          |   |             | (581 | )        |   |               |       |   |   |         |        |       |   |          | 108      |   |   |           | 5,594    |  
|                              | Stock issued under exercise of warrants                                                             |   |              |      |         |   |               | (1,383  | )             |   |             |       |          |   |             |     |          |   |               |       |   |   |         |        |       |   |          | 4,468    |   |   |           | 3,085    |  
|                              | Dividends declared on common stock                                                                  |   |              |      |         |   |               |        |               |   |             |       |          |   |             |     |          |   |               |       |   |   |         | (16,787 | )     |   |          |         |   |   |           | (16,787  | )
|                              | Purchase of treasury stock                                                                          |   |              |      |         |   |               |        |               |   |             |       |          |   |             |     |          |   |               |       |   |   |         |        |       |   |          | (44,985  | ) |   |           | (44,985  | )
|                              | Acquisition of IL Holdings                                                                          |   |              | 9,047 |         |   |               | 223,358 |               |   |             |       |          |   |             |     |          |   |               |       |   |   |         |        |       |   |          |         |   |   |           | 232,405  |  
|                              | Conversion of company-obligated
mandatorily redeemable preferred
capital securities                 |   |              | 4,242 |         |   |               | 139,478 |               |   |             |       |          |   |             |     |          |   |               |       |   |   |         |        |       |   |          | (16,173  | ) |   |           | 127,547  |  
|                              | Allocation of shares in leveraged
ESOP                                                              |   |              |      |         |   |               | 480     |               |   |             |       |          |   |             |     |          |   |               | 459    |   |   |         |        |       |   |          |         |   |   |           | 939      |  
|                              | Minimum pension liability adjustment                                                                |   |              |      |         |   |               |        |               |   |             | (2,332 | )        |   |             |     |          |   |               |       |   |   |         |        |       |   |          |         |   |   |           | (2,332   | )
|                              |                                                                                                     |   |              |       |         |   |               |         |               |   |             |        |          |   |             |      |          |   |               |        |   |   |         |         |       |   |          |          |   |   |           |         
|Balance at December 31, 2001  |                                                                                                     | $ | 43,506       |       |         | $ | 1,177,688     |         |               | $ | 12,669      |        |          | $ | (727        | )    |          | $ | (224          | )      |   | $ | 62,187  |         |       | $ | (56,582  | )        |   | $ | 1,238,517 |         
|2002 (unaudited):             |                                                                                                     |   |              |       |         |   |               |         |               |   |             |        |          |   |             |      |          |   |               |        |   |   |         |         |       |   |          |          |   |   |           |         
|                              | Net income                                                                                          |   |              |      |         |   |               |        |               |   |             |       |          |   |             |     |          |   |               |       |   |   |         | 55,667  |       |   |          |         |   |   |           | 55,667   |  
|                              | Net unrealized gain (loss) on securities                                                            |   |              |      |         |   |               |        |               |   |             | 60,744 |          |   |             |     |          |   |               |       |   |   |         |        |       |   |          |         |   |   |           | 60,744   |  
|                              | Net unrealized gain (loss) on derivatives
designated as cash flow hedges                            |   |              |      |         |   |               |        |               |   |             | 2,318  |          |   |             |     |          |   |               |       |   |   |         |        |       |   |          |         |   |   |           | 2,318    |  
|                              | Stock issued under various incentive
plans, net of forfeitures                                      |   |              | 144   |         |   |               | 5,114   |               |   |             |       |          |   |             | 251  |          |   |               |       |   |   |         |        |       |   |          | 1        |   |   |           | 5,510    |  
|                              | Stock issued under exercise of warrants                                                             |   |              |      |         |   |               | (3,802  | )             |   |             |       |          |   |             |     |          |   |               |       |   |   |         |        |       |   |          | 12,205   |   |   |           | 8,403    |  
|                              | Purchase of treasury stock and ESOP shares                                                          |   |              |      |         |   |               |        |               |   |             |       |          |   |             |     |          |   |               | (2,522 | ) |   |         |        |       |   |          | (112,116 | ) |   |           | (114,638 | )
|                              |                                                                                                     |   |              |       |         |   |               |         |               |   |             |        |          |   |             |      |          |   |               |        |   |   |         |         |       |   |          |          |   |   |           |         
|Balance at September 30, 2002 |                                                                                                     | $ | 43,650       |       |         | $ | 1,179,000     |         |               | $ | 75,731      |        |          | $ | (476        | )    |          | $ | (2,746        | )      |   | $ | 117,854 |         |       | $ | (156,492 | )        |   | $ | 1,256,521 |         
|                              |                                                                                                     |   |              |       |         |   |               |         |               |   |             |        |          |   |             |      |          |   |               |        |   |   |         |         |       |   |          |          |   |   |           |         

See accompanying notes to consolidated financial statements.

8



---



##### Table of Contents






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

|                                      |                                                                                   |                                           |                                                                                                                   |                                                        |         |                           |          |            |         |         |          |  
|------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------ | ------- | ------------------------- | -------- | ---------- | ------- | ------- | -------- | -
|                                      |                                                                                   |                                           |                                                                                                                   |                                                        |         | For The Nine Months Ended
|                                      |                                                                                   |                                           |                                                                                                                   |                                                        |         | September 30,            
|                                      |                                                                                   |                                           |                                                                                                                   |                                                        |         | 2002                      |          | 2001      
|                                      |                                                                                   |                                           |                                                                                                                   |                                                        |         |                           |          |           
|                                      |                                                                                   |                                           |                                                                                                                   |                                                        |         | (unaudited)              
|Cash flows from operating activities  |                                                                                   |                                           |                                                                                                                   |                                                        |         |                           |          |           
|                                      | Net income                                                                        |                                           | $                                                                                                                 | 55,667                                                 |         |                           | $        | 53,373     |        
|                                      | Adjustments to reconcile net income to net cash
provided by operating activities: |                                           |                                                                                                                   |                                                        |         |                           |          |            |        
|                                      |                                                                                   |                                           | Cumulative effect of change in accounting
for derivatives                                                         |                                                        |         |                          |          |            |         | 8,236   |         
|                                      |                                                                                   |                                           | Policyowner assessments on universal life
and annuity products                                                    |                                                        |         | (105,970                  | )        |            |         | (87,820 | )       
|                                      |                                                                                   |                                           | Interest credited to policyowner account
balances                                                                 |                                                        |         | 328,655                   |          |            |         | 284,148 |         
|                                      |                                                                                   |                                           | Change in option value of equity-indexed products
and market value adjustments on total
return strategy annuities |                                                        |         | (41,110                   | )        |            |         | (62,068 | )       
|                                      |                                                                                   |                                           | Realized/unrealized (gains) losses on investments                                                                 |                                                        |         | 122,574                   |          |            |         | 97,309  |         
|                                      |                                                                                   |                                           | Goodwill amortization                                                                                             |                                                        |         |                          |          |            |         | 6,348   |         
|                                      |                                                                                   |                                           | DAC amortization                                                                                                  |                                                        |         | 49,821                    |          |            |         | 24,215  |         
|                                      |                                                                                   |                                           | VOBA amortization                                                                                                 |                                                        |         | 53,631                    |          |            |         | 62,297  |         
|                                      |                                                                                   |                                           | Change in:                                                                                                        |                                                        |         |                           |          |            |         |         |         
|                                      |                                                                                   |                                           |                                                                                                                   | Accrued investment income                              |         |                           | (15,238  | )          |         |         | (10,974  | )
|                                      |                                                                                   |                                           |                                                                                                                   | Reinsurance receivables                                |         |                           | (104,959 | )          |         |         | (246,854 | )
|                                      |                                                                                   |                                           |                                                                                                                   | Securities held for trading purposes:                  |         |                           |          |            |         |         |          |  
|                                      |                                                                                   |                                           |                                                                                                                   | Fixed maturities                                       |         |                           | 299,674  |            |         |         | 20,835   |  
|                                      |                                                                                   |                                           |                                                                                                                   | Equity securities                                      |         |                           | 12,013   |            |         |         | (2,846   | )
|                                      |                                                                                   |                                           |                                                                                                                   | Short-term investments                                 |         |                           | (3,927   | )          |         |         |         |  
|                                      |                                                                                   |                                           |                                                                                                                   | DAC and VOBA                                           |         |                           | (289,273 | )          |         |         | (180,370 | )
|                                      |                                                                                   |                                           |                                                                                                                   | Liabilities for future policy benefits                 |         |                           | 489,022  |            |         |         | 133,002  |  
|                                      |                                                                                   |                                           |                                                                                                                   | Accrued expenses and other liabilities                 |         |                           | (63,474  | )          |         |         | (21,124  | )
|                                      |                                                                                   |                                           |                                                                                                                   | Policy and contract claims and other
policyowner funds |         |                           | 19,613   |            |         |         | 25,250   |  
|                                      |                                                                                   |                                           |                                                                                                                   | Income taxes:                                          |         |                           |          |            |         |         |          |  
|                                      |                                                                                   |                                           |                                                                                                                   | Current                                                |         |                           | (60,244  | )          |         |         | (17,829  | )
|                                      |                                                                                   |                                           |                                                                                                                   | Deferred                                               |         |                           | 51,382   |            |         |         | 39,896   |  
|                                      | Other, net                                                                        |                                           |                                                                                                                   | (19,264                                                | )       |                           |          | (12,766    | )      
|                                      |                                                                                   |                                           |                                                                                                                   |                                                        |         |                           |          |           
|                                      |                                                                                   | Net cash provided by operating activities |                                                                                                                   |                                                        | 778,593 |                           |          |            | 112,258 |        
|                                      |                                                                                   |                                           |                                                                                                                   |                                                        |         |                           |          |           
|Cash flows from investing activities: |                                                                                   |                                           |                                                                                                                   |                                                        |         |                           |          |           
|                                      | Purchase of fixed maturities available-for-sale                                   |                                           |                                                                                                                   | (5,049,012                                             | )       |                           |          | (3,538,411 | )      
|                                      | Proceeds from sale of fixed maturities available-for-sale                         |                                           |                                                                                                                   | 3,379,047                                              |         |                           |          | 2,172,292  |        
|                                      | Maturities, calls and principal reductions of
fixed maturities available-for-sale |                                           |                                                                                                                   | 531,840                                                |         |                           |          | 690,138    |        
|                                      | Purchase of equity securities                                                     |                                           |                                                                                                                   | (58,417                                                | )       |                           |          | (61,381    | )      
|                                      | Proceeds from sale of equity securities                                           |                                           |                                                                                                                   | 769                                                    |         |                           |          | 60,032     |        
|                                      | Change in short-term investments, net                                             |                                           |                                                                                                                   | (8,768                                                 | )       |                           |          | 9,418      |        
|                                      | Purchase of mortgage loans                                                        |                                           |                                                                                                                   | (53,375                                                | )       |                           |          | (116,390   | )      

9



---



##### Table of Contents



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

|                                                 |                                                                           |                                           |         |                           |            |      |         |           |          |  
|------------------------------------------------ | ------------------------------------------------------------------------- | ----------------------------------------- | ------- | ------------------------- | ---------- | ---- | ------- | --------- | -------- | -
|                                                 |                                                                           |                                           |         | For The Nine Months Ended
|                                                 |                                                                           |                                           |         | September 30,            
|                                                 |                                                                           |                                           |         | 2002                      |            | 2001
|                                                 |                                                                           |                                           |         |                           |            |     
|                                                 |                                                                           |                                           |         | (unaudited)              
|                                                 | Proceeds from repayment and sale of mortgage loans                        |                                           |         | 77,002                    |            |      |         | 96,810    |         
|                                                 | Purchase of real estate and other invested assets                         |                                           |         | (16,998                   | )          |      |         | (89,325   | )       
|                                                 | Proceeds from sale of real estate and other
invested assets               |                                           |         | 64,700                    |            |      |         | 91,009    |         
|                                                 | Change in policy loans, net                                               |                                           |         | 9,704                     |            |      |         | (915      | )       
|                                                 | Other assets, net                                                         |                                           |         | (5,537                    | )          |      |         | (40,624   | )       
|                                                 | Acquisitions, net of cash acquired                                        |                                           |         |                          |            |      |         | 156,925   |         
|                                                 |                                                                           |                                           |         |                           |            |      |         |           |          |  
|                                                 |                                                                           | Net cash (used in) investing activities   |         |                           | (1,129,045 | )    |         |           | (570,422 | )
|                                                 |                                                                           |                                           |         |                           |            |      |         |           |          |  
|Cash flows from financing activities:            |                                                                           |                                           |         |                           |            |      |         |          
|                                                 | Deposits to policyowner account balances                                  |                                           |         | 1,563,532                 |            |      |         | 1,504,357 |         
|                                                 | Withdrawals from policyowner account balances                             |                                           |         | (1,292,534                | )          |      |         | (923,596  | )       
|                                                 | Change in debt, net                                                       |                                           |         | (50,576                   | )          |      |         | 19,861    |         
|                                                 | Stock issued under various incentive plans, net of
forfeitures            |                                           |         | 5,510                     |            |      |         | 5,868     |         
|                                                 | Purchase of treasury stock                                                |                                           |         | (114,638                  | )          |      |         | (38,945   | )       
|                                                 | Proceeds from issuance of OCEANs                                          |                                           |         | 179,358                   |            |      |         |          |         
|                                                 | Retirement of company-obligated mandatorily
redeemable capital securities |                                           |         | (20,805                   | )          |      |         |          |         
|                                                 | Conversion of company-obligated mandatorily
redeemable capital securities |                                           |         |                          |            |      |         | 154       |         
|                                                 |                                                                           |                                           |         |                           |            |      |         |           |          |  
|                                                 |                                                                           | Net cash provided by financing activities |         |                           | 269,847    |      |         |           | 567,699  |  
|                                                 |                                                                           |                                           |         |                           |            |      |         |           |          |  
|                                                 |                                                                           | Net increase (decrease) in cash           |         |                           | (80,605    | )    |         |           | 109,535  |  
|Cash and cash equivalents at beginning of period |                                                                           |                                           | 179,376 |                           |            |      | 65,485  |          
|                                                 |                                                                           |                                           |         |                           |            |      |         |           |          |  
|Cash and cash equivalents at end of period       |                                                                           | $                                         | 98,771  |                           |            | $    | 175,020 |          
|                                                 |                                                                           |                                           |         |                           |            |      |         |           |          |  
|Supplemental disclosure of cash activities:      |                                                                           |                                           |         |                           |            |      |         |          
|                                                 | Interest paid                                                             |                                           | $       | 28,815                    |            |      | $       | 23,340    |         
|                                                 |                                                                           |                                           |         |                           |            |      |         |           |          |  
|                                                 | Income taxes paid                                                         |                                           | $       | 22,690                    |            |      | $       | 9,486     |         
|                                                 |                                                                           |                                           |         |                           |            |      |         |           |          |  
|Details of acquisitions:                         |                                                                           |                                           |         |                           |            |      |         |          
|                                                 | Fair value of assets acquired                                             |                                           |         |                           |            |      | $       | 5,676,350 |         
|                                                 | Liabilities assumed                                                       |                                           |         |                           |            |      |         | 5,349,908 |         
|                                                 |                                                                           |                                           |         |                           |            |      |         |           |          |  
|                                                 | Carrying value of acquisitions                                            |                                           |         |                          |            |      |         | 326,442   |         
|                                                 | Common stock issued                                                       |                                           |         |                           |            |      |         | (232,405  | )       
|                                                 | Accrual of cash payout component of purchase price                        |                                           |         |                           |            |      |         | (9,000    | )       
|                                                 | Preliminary investment in ILGC                                            |                                           |         |                           |            |      |         | (77,200   | )       
|                                                 | Acquisition costs previously paid                                         |                                           |         |                           |            |      |         | (2,857    | )       
|                                                 |                                                                           |                                           |         |                           |            |      |         |           |          |  
|                                                 | Cash paid                                                                 |                                           |         |                          |            |      |         | 4,980     |         
|                                                 | Less: Cash acquired                                                       |                                           |         |                           |            |      |         | 161,905   |         
|                                                 |                                                                           |                                           |         |                           |            |      |         |           |          |  
|                                                 | Net cash (received in) acquisitions                                       |                                           | $       |                          |            |      | $       | (156,925  | )       
|                                                 |                                                                           |                                           |         |                           |            |      |         |           |          |  

See accompanying notes to consolidated financial statements.

10



---



##### Table of Contents






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 Managements Discussion and
Analysis and the Notes to Consolidated Financial Statements. Operating results
for the nine months ended September 30, 2002 are not necessarily indicative of
the results that may be expected for the year ending December 31, 2002 (see
further discussion in Managements Discussion and Analysis). 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, 2001.

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
(ILICO). All significant intercompany transactions and balances have been
eliminated in consolidation.

Effective on March 29, 2002, Western Security Life Insurance Company, a
subsidiary of ILIC, was sold. The insurance business of Western Security Life
Insurance Company was transferred to ILIC prior to the sale. The sale of the
corporate organization and insurance licenses resulted in a gain of
approximately $1.9 million which is included in realized gains.

The residential financing and property operations were previously for sale
and were carried as discontinued operations in the consolidated financial
statements. During the third quarter of 2002, it was determined the sale would
not be completed. As a result, the consolidated financial statements for prior
periods have been restated to reclassify the assets, liabilities, and income of
the discontinued operations to the respective financial statement line items.
There was no adjustment to the carrying value of the net assets of these
operations, and accordingly, there was no effect on stockholders equity or net
income for the restatement.

Certain amounts in the 2001 financial statements have been reclassified to
conform to the 2002 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. In addition, 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. No undistributed net income
has been allocated to the convertible securities holders since their
participation in dividends with common stockholders is established at the
amount of the annual regular dividend. See further discussion of the OCEANs in
note 5.

11



---



##### Table of Contents



(3) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standard (SFAS) No. 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. In accordance with the provisions of SFAS No. 133, the
Company recorded a transition adjustment as of January 1, 2001 upon adoption of
the standard to recognize its derivative instruments at fair value resulting in
a pre-tax reduction to income of $12.4 million ($8.2 million after-tax) and an
increase to Accumulated Other Comprehensive Income (AOCI) of $2.7 million. The
basic and diluted earnings per common share for the cumulative effect
of change in accounting for derivatives amounts to $0.23 for the nine months
ended September 30, 2001. The reduction to income which is classified as a
cumulative effect of change in accounting for derivatives, net of tax in the
Consolidated Statements of Income, is attributable to losses on basis swaps
that were natural hedges and losses on interest rate swaps reclassified from
AOCI that have been redesignated as cash flow hedges of floating rate funding
agreement liability effective January 1, 2001. In addition, the reduction to
income includes adjustments to fair value for options being used to hedge
embedded options contained within equity-indexed products. The increase in
AOCI, which is classified as change in accounting for derivatives in the
Consolidated Statements of Comprehensive Income, is attributable to the
reclassification of the interest rate swaps fair value adjustment from AOCI to
the Consolidated Statements of Income.

During the first nine months of 2002 and 2001, realized/unrealized gains
(losses) on investments included an unrealized loss of $47.8 million and $62.5
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 nine months of 2002 and 2001 included an unrealized
loss of $16.8 million and $14.5 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 reduce contract
liabilities for fair value changes in options embedded within the
equity-indexed products and fair value changes on total return strategy
products of $41.1 million and $62.1 million for the first nine months of 2002
and 2001, respectively. In addition, basis swaps were terminated during the
first quarter of 2001 and an increase in fair value of $1.8 million on those
swaps was included in net investment income. AOCI included an unrealized gain
of $2.3 million and loss of $2.1 million from the fair value change in interest
rate swaps used to hedge the floating rate funding agreement liability during
the first nine months of 2002 and 2001, respectively. 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 $2.7 million expense in the first
nine months of 2002. The Company estimates that $3.3 million of derivative
losses, net of income taxes, included in AOCI will be reclassified into
earnings within the next twelve months.

12



---



##### Table of Contents



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 nine months ended September 30, 2002 and 2001 (in
thousands):

|                                                                              |                 |   |                                         |         |      |   |         |         |  
|----------------------------------------------------------------------------- | --------------- | - | --------------------------------------- | ------- | ---- | - | ------- | ------- | -
|                                                                              |                 |   | For The Nine Months Ended September 30,
|                                                                              |                 |   | 2002                                    |         | 2001
|                                                                              |                 |   |                                         |         |     
|                                                                              |                 |   | ($ in thousands)                       
|                                                                              |                 |   | (unaudited)                            
|Fixed maturity securities held for trading                                    |                 | $ | (16,792                                 | )       |      | $ | (14,497 | )      
|Options on equity-indexed products                                            |                 |   | (47,763                                 | )       |      |   | (62,538 | )      
|Equity-indexed and total return strategy liabilities                          |                 |   | 41,110                                  |         |      |   | 62,068  |        
|Cash flow hedge amortization                                                  |                 |   | (2,659                                  | )       |      |   |        |        
|Deferred policy acquisition cost amortization
impact of net adjustments above |                 |   | (676                                    | )       |      |   | 4,650   |        
|                                                                              |                 |   |                                         |         |      |   |         |        
|                                                                              | Pre-tax total   |   |                                         | (26,780 | )    |   |         | (10,317 | )
|                                                                              | Income taxes    |   |                                         | 9,373   |      |   |         | 3,611   |  
|                                                                              |                 |   |                                         |         |      |   |         |        
|                                                                              | After-tax total |   | $                                       | (17,407 | )    |   | $       | (6,706  | )
|                                                                              |                 |   |                                         |         |      |   |         |        

(4) 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 to a stock form. The second was established as of
March 31, 2000 in connection with the reorganization of ILIC to a stock form.
The operations of ILIC have been included in the consolidated financial
statements of the Company since May 18, 2001. 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 September 30,
2002 and December 31, 2001 and for the three months and nine months ended
September 30, 2002 and 2001 are as follows:

13



---



##### Table of Contents



|                                                                                         |                   |   |                  |           |              |   |           |           | 
|---------------------------------------------------------------------------------------- | ----------------- | - | ---------------- | --------- | ------------ | - | --------- | --------- | 
|                                                                                         |                   |   | September 30,    |           | December 31,
|                                                                                         |                   |   | 2002             |           | 2001        
|                                                                                         |                   |   |                  |           |             
|                                                                                         |                   |   | ($ in thousands)
|                                                                                         |                   |   | (unaudited)      |           |              |   |          
|Liabilities:                                                                             |                   |   |                  |           |              |   |           |          
|Future life and annuity policy benefits                                                  |                   | $ | 2,827,520        |           |              | $ | 2,835,423 |          
|Policyowner funds                                                                        |                   |   | 4,450            |           |              |   | 4,656     |          
|Accrued expenses and other liabilities                                                   |                   |   | 60,378           |           |              |   | 69,678    |          
|Dividends payable to policyowners                                                        |                   |   | 148,516          |           |              |   | 154,139   |          
|Policy and contract claims                                                               |                   |   | 12,017           |           |              |   | 8,843     |          
|Policyowner dividend obligation                                                          |                   |   | 118,167          |           |              |   | 61,486    |          
|                                                                                         |                   |   |                  |           |              |   |           |          
|                                                                                         | Total Liabilities |   |                  | 3,171,048 |              |   |           | 3,134,225 | 
|                                                                                         |                   |   |                  |           |              |   |           |          
|Assets:                                                                                  |                   |   |                  |           |              |   |           |          
|Fixed maturity securities available-for-sale at fair value                               |                   |   | 1,949,793        |           |              |   | 1,829,060 |          
|Mortgage loans                                                                           |                   |   | 97,935           |           |              |   | 105,901   |          
|Policy loans                                                                             |                   |   | 355,981          |           |              |   | 363,981   |          
|Other investments                                                                        |                   |   | 20,695           |           |              |   | 4,653     |          
|Cash and cash equivalents                                                                |                   |   | 14,699           |           |              |   | 18,382    |          
|Accrued investment income                                                                |                   |   | 31,827           |           |              |   | 32,396    |          
|Premiums and fees receivable                                                             |                   |   | 16,223           |           |              |   | 22,414    |          
|Other assets                                                                             |                   |   | 21,060           |           |              |   | 41,827    |          
|                                                                                         |                   |   |                  |           |              |   |           |          
|                                                                                         | Total Assets      |   |                  | 2,508,213 |              |   |           | 2,418,614 | 
|                                                                                         |                   |   |                  |           |              |   |           |          
|Maximum future earnings to be recognized from assets and
liabilities of the Closed Block |                   | $ | 662,835          |           |              | $ | 715,611   |          
|                                                                                         |                   |   |                  |           |              |   |           |          

|                                                       |  |                            |         |                           |  |      |         |      |  |   |          |   |  |   |          |  
|------------------------------------------------------ |  | -------------------------- | ------- | ------------------------- |  | ---- | ------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                                       |  | For The Three Months Ended |         | For The Nine Months Ended
|                                                       |  | September 30,              |         | September 30,            
|                                                       |  | 2002                       |         | 2001                      |  | 2002 |         | 2001
|                                                       |  |                            |         |                           |  |      |         |     
|                                                       |  | ($ in thousands)          
|                                                       |  | (unaudited)               
|Operations:                                            |  |                            |         |                           |  |      |         |      |  |   |          |   |  |   |          |  
|Insurance premiums                                     |  | $                          | 61,547  |                           |  | $    | 73,634  |      |  | $ | 195,657  |   |  | $ | 178,196  |  
|Universal life and annuity product charges             |  |                            | 3,500   |                           |  |      | 3,167   |      |  |   | 6,941    |   |  |   | 9,496    |  
|Net investment income                                  |  |                            | 40,315  |                           |  |      | 37,641  |      |  |   | 117,292  |   |  |   | 92,450   |  
|Realized gains (losses) on investments                 |  |                            | (1,126  | )                         |  |      | 1,889   |      |  |   | (1,880   | ) |  |   | 2,202    |  
|Policyowner benefits                                   |  |                            | (70,101 | )                         |  |      | (84,013 | )    |  |   | (214,850 | ) |  |   | (194,912 | )
|Underwriting, acquisition and other expenses           |  |                            | (968    | )                         |  |      | (1,101  | )    |  |   | (3,704   | ) |  |   | (2,788   | )
|Dividends to policyowners                              |  |                            | (22,132 | )                         |  |      | (24,338 | )    |  |   | (65,437  | ) |  |   | (63,161  | )
|                                                       |  |                            |         |                           |  |      |         |      |  |   |          |   |  |   |          |  
|Contribution from the Closed Block before income taxes |  | $                          | 11,035  |                           |  | $    | 6,879   |      |  | $ | 34,019   |   |  | $ | 21,483   |  
|                                                       |  |                            |         |                           |  |      |         |      |  |   |          |   |  |   |          |  

14



---



##### Table of Contents



(5) NOTES PAYABLE

Notes payable consist of the following:

|                                                                                                                                        |  |                  |         |              |  |   |         | 
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------- | ------------ |  | - | ------- | 
|                                                                                                                                        |  | September 30,    |         | December 31,
|                                                                                                                                        |  | 2002             |         | 2001        
|                                                                                                                                        |  |                  |         |             
|                                                                                                                                        |  | ($ in thousands)
|                                                                                                                                        |  | (unaudited)      |         |              |  |  
|Federal Home Loan Bank community investment
long-term advances with a weighted average
interest rate of 6.37% at September 30, 2002 (A) |  | $                | 13,998  |              |  | $ | 14,369  | 
|Optionally Convertible Equity-linked Accreting Notes
due on March 6, 2032 (B)                                                           |  |                  | 185,863 |              |  |   |        | 
|Senior notes bearing interest at 6.95%
due June, 2005                                                                                   |  |                  | 125,000 |              |  |   | 125,000 | 
|Revolving credit agreement                                                                                                              |  |                  | 101,000 |              |  |   | 150,000 | 
|Surplus notes bearing interest at 8.66% due on
April 11, 2011                                                                           |  |                  | 25,000  |              |  |   | 25,000  | 
|Note payable to a bank bearing interest at 7.24%
due March, 2004                                                                        |  |                  |        |              |  |   | 1,205   | 
|AmerUs Capital I 8.85 % Capital
Securities Series A due
February 1, 2007 (C)                                                            |  |                  | 48,095  |              |  |   | 68,900  | 
|AmerUs Capital II 7.00 % Quarterly
Income Preferred Securities due July 27, 2003                                                        |  |                  | 154     |              |  |   | 154     | 
|                                                                                                                                        |  |                  |         |              |  |   |         | 
|                                                                                                                                        |  | $                | 499,110 |              |  | $ | 384,628 | 
|                                                                                                                                        |  |                  |         |              |  |   |         | 

(A)  The Company has multiple credit arrangements with the Federal Home Loan
Bank (FHLB). In addition to the long-term advances disclosed above, the
Company is eligible to borrow under variable-rate short term fed funds
arrangements of which no amount was outstanding at September 30, 2002. These
borrowings are secured and interest is payable at the current rate at the time
of each advance.

(B)  On March 6, 2002, the Company issued $185 million aggregate original
principal amount of OCEANs. The OCEANs are senior subordinated debt and were
issued and sold in an original principal

15



---



##### Table of Contents



amount of $1,000 per OCEAN, with a principal amount at maturity of $1,270 per
OCEAN. The maturity date of the OCEANs is March 6, 2032. The OCEANs will have
aggregate principal amount at maturity of $234,950,000. The notes are
convertible into shares of the Companys common stock at an initial conversion
price (subject to adjustment) of $37.60 per share only if the sale price of the
common stock exceeds $47.85 per share for at least 20 trading days in a 30-day
trading period or in certain other limited circumstances.

Proceeds from the OCEANs were used to repay borrowings on the Companys
revolving credit agreement and to purchase approximately 1.7 million shares
amounting to $59 million of the Companys common stock. The OCEANs are senior
subordinated debt, subordinated in right of payment to all existing and future
senior debt and senior to all existing and future junior subordinated debt.

(C)  On March 26, 2002, $20.8 million of the AmerUs Capital I 8.85% Capital
Securities were repurchased which did not result in a material gain.

For an additional discussion of the terms of the above indebtedness refer
to the Companys consolidated financial statements as of December 31, 2001.

(6) FEDERAL INCOME TAXES

The effective income tax rate for the three-months and nine months ending
September 30, 2002 and 2001, respectively, varied from the prevailing corporate
rate primarily as a result of non-deductible demutualization costs, low income
housing and rehabilitation credits, and tax exempt income in 2002 and 2001 and
goodwill amortization in 2001.

(7) ACQUISITIONS

On May 18, 2001, the Company completed the acquisition of ILICO for an
amount of cash, policy credits and shares of the Companys common stock equal
to the value of 9.3 million shares of the Companys common stock. The purchase
price totaled approximately $326 million. The acquisition was accounted for
using the purchase method of accounting and accordingly the total purchase
price was allocated to the assets and liabilities of ILICO based on the
relative fair values as of May 18, 2001, with the excess of the purchase price
over the fair value of the assets acquired less the fair value of the
liabilities assumed recorded as goodwill. Goodwill was amortized over thirty
years through December 31, 2001. In accordance with SFAS 142, Goodwill and
Other Intangible Assets, effective January 1, 2002, goodwill is no longer
amortized but instead tested for impairment on an annual basis (see note 9).
The operations of ILICO have been included in the consolidated financial
statements of the Company since May 18, 2001. The allocation of the purchase
price of ILICO is as follows (in millions):

|                                                        |                           |   |             |       | 
|------------------------------------------------------- | ------------------------- | - | ----------- | ----- | 
|                                                        |                           |   | (unaudited)
|Investments (including cash and short-term investments) |                           | $ | 4,674.1     |      
|Receivables and other assets                            |                           |   | 434.7       |      
|Value of business acquired                              |                           |   | 215.4       |      
|Goodwill                                                |                           |   | 40.7        |      
|Separate account assets                                 |                           |   | 345.6       |      
|Policyowner reserves and funds                          |                           |   | (4,887.4    | )    
|Other liabilities                                       |                           |   | (126.1      | )    
|Debt                                                    |                           |   | (25.0       | )    
|Separate account liabilities                            |                           |   | (345.6      | )    
|                                                        |                           |   |             |      
|                                                        | Total investment in ILICO |   | $           | 326.4 | 
|                                                        |                           |   |             |      

16



---



##### Table of Contents



In June 2002, the Company acquired an Independent Marketing Organization
(IMO) for cash of $7.5 million. The total purchase price was allocated to the
assets and liabilities based on the relative fair values with the excess of the
purchase price over the fair value of the assets acquired less the fair value
of the liabilities assumed recorded as goodwill. Goodwill amounting to $7.2
million was established in connection with the acquisition. If certain
financial targets are met during the next six years, the purchase price can be
increased by up to $3 million per year. Such purchase amounts, if any, would
be recorded as additional goodwill.

(8) 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. The elimination of duplicative functions is intended to reduce on-going
operating costs for the Company. Corporate administrative functions
are being transitioned so they are performed primarily in Des Moines, Iowa.  Protection products administrative processes
will be transitioned so they are performed in Des Moines; Woodbury, New
York; or outsourced. Accumulation products functions will be transitioned to
Topeka, Kansas. Investment activities have been restructured to eliminate
certain real estate management services which have been outsourced.

Restructuring charges have been included in the consolidated statement of
income for the three months and nine months ended September 30, 2002. The
restructuring charges for the nine months ended September 30, 2002 include
pre-tax severance and termination benefits of $5.5 million related to the
elimination of approximately 90 positions and other pre-tax costs of $5.3
million primarily related to systems conversion and relocation of employees.
An accrual for severance and termination benefits not yet paid amounted to $2.8
million at September 30, 2002.

The Company has not finalized all restructuring activities as of September
30, 2002. Additional activities will primarily involve relocation or severance
benefits for affected employees, various administrative, financial, and
actuarial system conversion costs and building disposition costs. Expenditures for all restructuring
activities are expected to be completed by the fourth quarter of 2003.

(9) ADOPTION OF SFAS 142

SFAS 142, Goodwill and Other Intangible Assets, changes the accounting
for goodwill and other intangible assets and became effective January 1, 2002.
SFAS 142 adopts a nonamortization, impairment-only model for the Companys
goodwill and indefinite-lived intangible assets. This includes a more
stringent impairment test methodology for measuring and recognizing impairment
losses. The Company accordingly discontinued amortization of goodwill on
January 1, 2002. As of September 30, 2002, goodwill of $34.2 million is in the
protection products segment and $189.3 million is in the accumulation products
segment. The only intangible asset other than goodwill, is value of business
acquired (VOBA) which is being amortized and amounted to a gross carrying
amount of $832.4 million and accumulated amortization of $329.2 million at
September 30, 2002. Goodwill changed from $195.5 million at December 31, 2001
to $223.5 million at September 30, 2002 primarily due to the adjustment of the
ILICO purchase price allocation which increased goodwill approximately $19.8
million and goodwill attributable to the acquisition of independent marketing
organizations of approximately $8.2 million. The Company has evaluated the
transitional impairment analysis for goodwill and other intangible assets and
determined such assets are not impaired as of January 1, 2002.

17



---



##### Table of Contents



A reconciliation of net income and basic and diluted earnings per share
reported for the three months and nine months ended September 30, 2001 to
exclude amortization expense of goodwill is as follows:

|                                       |                                     |   |                                            |        |                           |   |        |        |      |   |        |        |  |   |        |        | 
|-------------------------------------- | ----------------------------------- | - | ------------------------------------------ | ------ | ------------------------- | - | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                                       |                                     |   | For The Three Months Ended                 |        | For The Nine Months Ended
|                                       |                                     |   | September 30,                              |        | September 30,            
|                                       |                                     |   | 2002                                       |        | 2001                      |   | 2002   |        | 2001
|                                       |                                     |   |                                            |        |                           |   |        |        |     
|                                       |                                     |   | ($ in thousands, except per share amounts)
|                                       |                                     |   | (unaudited)                               
|Net income as reported                 |                                     | $ | 26,490                                     |        |                           | $ | 21,510 |        |      | $ | 55,667 |        |  | $ | 53,373 |       
|Goodwill amortization expense          |                                     |   |                                           |        |                           |   | 2,450  |        |      |   |       |        |  |   | 6,348  |       
|                                       |                                     |   |                                            |        |                           |   |        |        |      |   |        |        |  |   |        |       
|                                       | Adjusted net income                 |   | $                                          | 26,490 |                           |   | $      | 23,960 |      |   | $      | 55,667 |  |   | $      | 59,721 | 
|                                       |                                     |   |                                            |        |                           |   |        |        |      |   |        |        |  |   |        |       
|Basic earnings per share as reported   |                                     | $ | 0.67                                       |        |                           | $ | 0.52   |        |      | $ | 1.38   |        |  | $ | 1.51   |       
|Goodwill amortization expense          |                                     |   |                                           |        |                           |   | 0.06   |        |      |   |       |        |  |   | 0.18   |       
|                                       |                                     |   |                                            |        |                           |   |        |        |      |   |        |        |  |   |        |       
|                                       | Adjusted basic earnings per share   |   | $                                          | 0.67   |                           |   | $      | 0.58   |      |   | $      | 1.38   |  |   | $      | 1.69   | 
|                                       |                                     |   |                                            |        |                           |   |        |        |      |   |        |        |  |   |        |       
|Diluted earnings per share as reported |                                     | $ | 0.66                                       |        |                           | $ | 0.51   |        |      | $ | 1.36   |        |  | $ | 1.49   |       
|Goodwill amortization expense          |                                     |   |                                           |        |                           |   | 0.06   |        |      |   |       |        |  |   | 0.18   |       
|                                       |                                     |   |                                            |        |                           |   |        |        |      |   |        |        |  |   |        |       
|                                       | Adjusted diluted earnings per share |   | $                                          | 0.66   |                           |   | $      | 0.57   |      |   | $      | 1.36   |  |   | $      | 1.67   | 
|                                       |                                     |   |                                            |        |                           |   |        |        |      |   |        |        |  |   |        |       

(10) 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 involved in
litigation, 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.

Previously, the Company disclosed it was aware of a dispute between the
retrocessionaire and the reinsurer of a block of annuity business written by IL
Annuity and Insurance Company (IL Annuity), a subsidiary of ILICo, as well as
potential claims of the Reinsurer against IL Annuity. Recently, the reinsurer
informally notified the Company of its intention to arbitrate a claim.
Subsequent to receiving this notice, the Company was informed that the
retrocessionaires claim for breach of contract against the reinsurer was
denied. While it is not feasible to predict the outcome of any claims by the
reinsurer against IL Annuity, the Company believes, based upon currently
available information, that the ultimate liability, if any, with respect to these claims would not have a material adverse
effect on the Companys consolidated financial position or results of
operations.

(11) 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 whole life,
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 IMOs.

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

18



---



##### Table of Contents



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 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
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) |  | Other income from non-insurance operations.                                                                                                                          

These items will fluctuate from period to period depending on the
prevailing interest rate and economic environment, 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 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, 2001.

19



---



##### Table of Contents



Operating Segment Income
($ in thousands)
(unaudited)

|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |         |         |        | 
|--------------------------------- | --------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ---------- | - | --------------------------------------------- | - | ------------ | - | --------- | - | ------------ | - | ----- |  | ------- | ------- | ------- | ------ | 
|                                  |                                   |                                                                                                                           |            |   | For The Three Months Ended September 30, 2002
|                                  |                                   |                                                                                                                           |            |   |                                              
|                                  |                                   |                                                                                                                           |            |   | Protection                                    |   | Accumulation |   |           |   |              |   | Total
|                                  |                                   |                                                                                                                           |            |   | Products                                      |   | Products     |   | All Other |   | Consolidated
|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |             
|Revenues:                         |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |        
|                                  |                                   | Insurance premiums                                                                                                        |            | $ | 77,595                                        |   |              | $ | 674       |   |              | $ | 232   |  |         | $       | 78,501  |       
|                                  |                                   | Universal life and annuity product charges                                                                                |            |   | 31,662                                        |   |              |   | 10,545    |   |              |   |      |  |         |         | 42,207  |       
|                                  |                                   | Net investment income                                                                                                     |            |   | 84,202                                        |   |              |   | 167,054   |   |              |   | 1,132 |  |         |         | 252,388 |       
|                                  |                                   | Realized gains (losses) on closed block investments                                                                       |            |   | (1,126                                        | ) |              |   |          |   |              |   |      |  |         |         | (1,126  | )     
|                                  |                                   | Other income                                                                                                              |            |   | 1,068                                         |   |              |   | 16,521    |   |              |   | 773   |  |         |         | 18,362  |       
|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |         |         |       
|                                  |                                   |                                                                                                                           | 193,401    |   |                                               |   | 194,794      |   |           |   | 2,137        |   |       |  | 390,332 |        
|Benefits and expenses:            |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |        
|                                  |                                   | Policyowner benefits                                                                                                      |            |   | 108,406                                       |   |              |   | 120,440   |   |              |   | 538   |  |         |         | 229,384 |       
|                                  |                                   | Underwriting, acquisition, and other expenses                                                                             |            |   | 15,204                                        |   |              |   | 17,422    |   |              |   | 3,341 |  |         |         | 35,967  |       
|                                  |                                   | Amortization of DAC and VOBA, net of
open block loss adjustment of ($4,616)                                               |            |   | 15,287                                        |   |              |   | 24,618    |   |              |   |      |  |         |         | 39,905  |       
|                                  |                                   | Dividends to policyowners                                                                                                 |            |   | 24,377                                        |   |              |   |          |   |              |   |      |  |         |         | 24,377  |       
|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |         |         |       
|                                  |                                   |                                                                                                                           | 163,274    |   |                                               |   | 162,480      |   |           |   | 3,879        |   |       |  | 329,633 |        
|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |         |         |       
|Adjusted pre-tax operating income |                                   | $                                                                                                                         | 30,127     |   |                                               | $ | 32,314       |   |           | $ | (1,742       | ) |       |  | 60,699  |        
|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |        
|                                  |                                   | Realized gains (losses) on open block investments                                                                         |            |   |                                               |   |              |   |           |   |              |   |       |  |         |         | (10,506 | )     
|                                  |                                   | Unrealized gains (losses) on open block options and
trading investments                                                   |            |   |                                               |   |              |   |           |   |              |   |       |  |         |         | (10,319 | )     
|                                  |                                   | Change in option value of equity-indexed
annuity products and market value
adjustments on total return strategy annuities |            |   |                                               |   |              |   |           |   |              |   |       |  |         |         | 5,242   |       
|                                  |                                   | Cash flow hedge amortization                                                                                              |            |   |                                               |   |              |   |           |   |              |   |       |  |         |         | (1,961  | )     
|                                  |                                   | Amortization of DAC and VOBA due to open
block losses                                                                     |            |   |                                               |   |              |   |           |   |              |   |       |  |         |         | 4,616   |       
|                                  |                                   | Demutualization costs                                                                                                     |            |   |                                               |   |              |   |           |   |              |   |       |  |         |         | (722    | )     
|                                  |                                   | Restructuring costs                                                                                                       |            |   |                                               |   |              |   |           |   |              |   |       |  |         |         | (2,569  | )     
|                                  |                                   | Other income from non-insurance operations                                                                                |            |   |                                               |   |              |   |           |   |              |   |       |  |         |         | 2,272   |       
|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |        
|                                  | Income from continuing operations |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         | 46,752  |        
|                                  | Interest (expense)                |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         | (6,414  | )      
|                                  | Income tax (expense)              |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         | (13,848 | )      
|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |        
|                                  |                                   |                                                                                                                           | Net income |   |                                               |   |              |   |           |   |              |   |       |  |         |         | $       | 26,490 | 
|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |        

20



---



##### Table of Contents



Operating Segment Income
($ in thousands)
(unaudited)

|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |        |         |        | 
|--------------------------------- | --------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ---------- | - | --------------------------------------------- | - | ------------ | - | --------- | - | ------------ | - | ----- |  | ------- | ------ | ------- | ------ | 
|                                  |                                   |                                                                                                                           |            |   | For The Three Months Ended September 30, 2001
|                                  |                                   |                                                                                                                           |            |   |                                              
|                                  |                                   |                                                                                                                           |            |   | Protection                                    |   | Accumulation |   |           |   |              |   | Total
|                                  |                                   |                                                                                                                           |            |   | Products                                      |   | Products     |   | All Other |   | Consolidated
|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |             
|Revenues:                         |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |       
|                                  |                                   | Insurance premiums                                                                                                        |            | $ | 89,237                                        |   |              | $ | 3,022     |   |              | $ | 263   |  |         | $      | 92,522  |       
|                                  |                                   | Universal life and annuity product charges                                                                                |            |   | 37,672                                        |   |              |   | 9,735     |   |              |   |      |  |         |        | 47,407  |       
|                                  |                                   | Net investment income                                                                                                     |            |   | 79,822                                        |   |              |   | 148,944   |   |              |   | 3,177 |  |         |        | 231,943 |       
|                                  |                                   | Closed block realized gains (losses) on investments                                                                       |            |   | 1,889                                         |   |              |   |          |   |              |   |      |  |         |        | 1,889   |       
|                                  |                                   | Other income                                                                                                              |            |   | 1,005                                         |   |              |   | 8,860     |   |              |   | 1,248 |  |         |        | 11,113  |       
|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |        |         |       
|                                  |                                   |                                                                                                                           | 209,625    |   |                                               |   | 170,561      |   |           |   | 4,688        |   |       |  | 384,874 |       
|Benefits and expenses:            |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |       
|                                  |                                   | Policyowner benefits                                                                                                      |            |   | 117,332                                       |   |              |   | 106,787   |   |              |   | 1,285 |  |         |        | 225,404 |       
|                                  |                                   | Underwriting, acquisition, and other expenses                                                                             |            |   | 21,567                                        |   |              |   | 17,149    |   |              |   | 2,084 |  |         |        | 40,800  |       
|                                  |                                   | Amortization of DAC and VOBA, net of
open block loss adjustment of ($7,321)                                               |            |   | 17,289                                        |   |              |   | 21,302    |   |              |   |      |  |         |        | 38,591  |       
|                                  |                                   | Dividends to policyowners                                                                                                 |            |   | 26,191                                        |   |              |   |          |   |              |   |      |  |         |        | 26,191  |       
|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |        |         |       
|                                  |                                   |                                                                                                                           | 182,379    |   |                                               |   | 145,238      |   |           |   | 3,369        |   |       |  | 330,986 |       
|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |        |         |       
|Adjusted pre-tax operating income |                                   | $                                                                                                                         | 27,246     |   |                                               | $ | 25,323       |   |           | $ | 1,319        |   |       |  | 53,888  |       
|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |       
|                                  |                                   | Realized gains (losses) on open block investments                                                                         |            |   |                                               |   |              |   |           |   |              |   |       |  |         |        | (8,161  | )     
|                                  |                                   | Unrealized gains (losses) on open block options and
trading investments                                                   |            |   |                                               |   |              |   |           |   |              |   |       |  |         |        | (39,030 | )     
|                                  |                                   | Change in option value of equity-indexed
annuity products and market value
adjustments on total return strategy annuities |            |   |                                               |   |              |   |           |   |              |   |       |  |         |        | 29,559  |       
|                                  |                                   | Amortization of DAC and VOBA due to open
block losses                                                                     |            |   |                                               |   |              |   |           |   |              |   |       |  |         |        | 7,321   |       
|                                  |                                   | Demutualization costs                                                                                                     |            |   |                                               |   |              |   |           |   |              |   |       |  |         |        | (249    | )     
|                                  |                                   | Restructuring costs                                                                                                       |            |   |                                               |   |              |   |           |   |              |   |       |  |         |        | (6,527  | )     
|                                  |                                   | Other income from non-insurance operations                                                                                |            |   |                                               |   |              |   |           |   |              |   |       |  |         |        | 428     |       
|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |       
|                                  | Income from continuing operations |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         | 37,229 |        
|                                  | Interest (expense)                |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         | (5,974 | )      
|                                  | Income tax (expense)              |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         | (9,745 | )      
|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |       
|                                  |                                   |                                                                                                                           | Net income |   |                                               |   |              |   |           |   |              |   |       |  |         |        | $       | 21,510 | 
|                                  |                                   |                                                                                                                           |            |   |                                               |   |              |   |           |   |              |   |       |  |         |       

21



---



##### Table of Contents



Operating Segment Income
($ in thousands)
(unaudited)

|                                  |                                   |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |        |  |           |         |         |        | 
|--------------------------------- | --------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ---------- | - | -------------------------------------------- | - | ------------ | - | --------- | - | ------------ | - | ------ |  | --------- | ------- | ------- | ------ | 
|                                  |                                   |                                                                                                                           |            |   | For The Nine Months Ended September 30, 2002
|                                  |                                   |                                                                                                                           |            |   |                                             
|                                  |                                   |                                                                                                                           |            |   | Protection                                   |   | Accumulation |   |           |   |              |   | Total 
|                                  |                                   |                                                                                                                           |            |   | Products                                     |   | Products     |   | All Other |   | Consolidated
|                                  |                                   |                                                                                                                           |            |   |                                              |   |              |   |           |   |             
|Revenues:                         |                                   |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |        |  |           |        
|                                  |                                   | Insurance premiums                                                                                                        |            | $ | 255,938                                      |   |              | $ | 6,854     |   |              | $ | 1,065  |  |           | $       | 263,857 |       
|                                  |                                   | Universal life and annuity product charges                                                                                |            |   | 93,108                                       |   |              |   | 31,284    |   |              |   |       |  |           |         | 124,392 |       
|                                  |                                   | Net investment income                                                                                                     |            |   | 248,044                                      |   |              |   | 491,941   |   |              |   | 4,069  |  |           |         | 744,054 |       
|                                  |                                   | Closed block realized gains (losses) on investments                                                                       |            |   | (1,880                                       | ) |              |   |          |   |              |   |       |  |           |         | (1,880  | )     
|                                  |                                   | Other income                                                                                                              |            |   | 3,013                                        |   |              |   | 44,962    |   |              |   | 2,325  |  |           |         | 50,300  |       
|                                  |                                   |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |        |  |           |         |         |       
|                                  |                                   |                                                                                                                           | 598,223    |   |                                              |   | 575,041      |   |           |   | 7,459        |   |        |  | 1,180,723 |        
|Benefits and expenses:            |                                   |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |        |  |           |        
|                                  |                                   | Policyowner benefits                                                                                                      |            |   | 330,555                                      |   |              |   | 366,203   |   |              |   | 1,728  |  |           |         | 698,486 |       
|                                  |                                   | Underwriting, acquisition, and other expenses                                                                             |            |   | 56,148                                       |   |              |   | 48,810    |   |              |   | 10,463 |  |           |         | 115,421 |       
|                                  |                                   | Amortization of DAC and VOBA, net of
open block loss adjustment of ($9,902)                                               |            |   | 44,126                                       |   |              |   | 69,228    |   |              |   |       |  |           |         | 113,354 |       
|                                  |                                   | Dividends to policyowners                                                                                                 |            |   | 72,000                                       |   |              |   |          |   |              |   |       |  |           |         | 72,000  |       
|                                  |                                   |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |        |  |           |         |         |       
|                                  |                                   |                                                                                                                           | 502,829    |   |                                              |   | 484,241      |   |           |   | 12,191       |   |        |  | 999,261   |        
|                                  |                                   |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |        |  |           |         |         |       
|Adjusted pre-tax operating income |                                   | $                                                                                                                         | 95,394     |   |                                              | $ | 90,800       |   |           | $ | (4,732       | ) |        |  | 181,462   |        
|                                  |                                   |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |        |  |           |        
|                                  |                                   | Realized gains (losses) on open block investments                                                                         |            |   |                                              |   |              |   |           |   |              |   |        |  |           |         | (56,139 | )     
|                                  |                                   | Unrealized gains (losses) on open block options and
trading investments                                                   |            |   |                                              |   |              |   |           |   |              |   |        |  |           |         | (64,555 | )     
|                                  |                                   | Change in option value of equity-indexed
annuity products and market value
adjustments on total return strategy annuities |            |   |                                              |   |              |   |           |   |              |   |        |  |           |         | 41,110  |       
|                                  |                                   | Cash flow hedge amortization                                                                                              |            |   |                                              |   |              |   |           |   |              |   |        |  |           |         | (2,659  | )     
|                                  |                                   | Amortization of DAC and VOBA due to open
block losses                                                                     |            |   |                                              |   |              |   |           |   |              |   |        |  |           |         | 9,902   |       
|                                  |                                   | Demutualization costs                                                                                                     |            |   |                                              |   |              |   |           |   |              |   |        |  |           |         | (1,186  | )     
|                                  |                                   | Restructuring costs                                                                                                       |            |   |                                              |   |              |   |           |   |              |   |        |  |           |         | (10,780 | )     
|                                  |                                   | Other income from non-insurance operations                                                                                |            |   |                                              |   |              |   |           |   |              |   |        |  |           |         | 3,268   |       
|                                  |                                   |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |        |  |           |        
|                                  | Income from continuing operations |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |        |  |           | 100,423 |        
|                                  | Interest (expense)                |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |        |  |           | (18,778 | )      
|                                  | Income tax (expense)              |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |        |  |           | (25,978 | )      
|                                  |                                   |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |        |  |           |        
|                                  |                                   |                                                                                                                           | Net income |   |                                              |   |              |   |           |   |              |   |        |  |           |         | $       | 55,667 | 
|                                  |                                   |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |        |  |           |        

22



---



##### Table of Contents



Operating Segment Income
($ in thousands)
(unaudited)

|                                  |                                                                       |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |       |  |         |         |         |        | 
|--------------------------------- | --------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ---------- | - | -------------------------------------------- | - | ------------ | - | --------- | - | ------------ | - | ----- |  | ------- | ------- | ------- | ------ | 
|                                  |                                                                       |                                                                                                                           |            |   | For The Nine Months Ended September 30, 2001
|                                  |                                                                       |                                                                                                                           |            |   |                                             
|                                  |                                                                       |                                                                                                                           |            |   | Protection                                   |   | Accumulation |   |           |   |              |   | Total
|                                  |                                                                       |                                                                                                                           |            |   | Products                                     |   | Products     |   | All Other |   | Consolidated
|                                  |                                                                       |                                                                                                                           |            |   |                                              |   |              |   |           |   |             
|Revenues:                         |                                                                       |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |       |  |         |        
|                                  |                                                                       | Insurance premiums                                                                                                        |            | $ | 210,669                                      |   |              | $ | 10,216    |   |              | $ | 516   |  |         | $       | 221,401 |       
|                                  |                                                                       | Universal life and annuity product charges                                                                                |            |   | 80,627                                       |   |              |   | 25,893    |   |              |   |      |  |         |         | 106,520 |       
|                                  |                                                                       | Net investment income                                                                                                     |            |   | 198,147                                      |   |              |   | 414,816   |   |              |   | 7,201 |  |         |         | 620,164 |       
|                                  |                                                                       | Closed block realized gains (losses) on investments                                                                       |            |   | 2,202                                        |   |              |   |          |   |              |   |      |  |         |         | 2,202   |       
|                                  |                                                                       | Other income                                                                                                              |            |   | 1,005                                        |   |              |   | 26,996    |   |              |   | 5,743 |  |         |         | 33,744  |       
|                                  |                                                                       |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |       |  |         |         |         |       
|                                  |                                                                       |                                                                                                                           | 492,650    |   |                                              |   | 477,921      |   |           |   | 13,460       |   |       |  | 984,031 |        
|Benefits and expenses:            |                                                                       |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |       |  |         |        
|                                  |                                                                       | Policyowner benefits                                                                                                      |            |   | 264,869                                      |   |              |   | 301,021   |   |              |   | 1,870 |  |         |         | 567,760 |       
|                                  |                                                                       | Underwriting, acquisition, and other expenses                                                                             |            |   | 53,618                                       |   |              |   | 45,231    |   |              |   | 8,406 |  |         |         | 107,255 |       
|                                  |                                                                       | Amortization of DAC and VOBA, net of
open block loss adjustment of ($12,858)                                              |            |   | 39,022                                       |   |              |   | 60,348    |   |              |   |      |  |         |         | 99,370  |       
|                                  |                                                                       | Dividends to policyowners                                                                                                 |            |   | 68,416                                       |   |              |   |          |   |              |   |      |  |         |         | 68,416  |       
|                                  |                                                                       |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |       |  |         |         |         |       
|                                  |                                                                       |                                                                                                                           | 425,925    |   |                                              |   | 406,600      |   |           |   | 10,276       |   |       |  | 842,801 |        
|                                  |                                                                       |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |       |  |         |         |         |       
|Adjusted pre-tax operating income |                                                                       | $                                                                                                                         | 66,725     |   |                                              | $ | 71,321       |   |           | $ | 3,184        |   |       |  | 141,230 |        
|                                  |                                                                       |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |       |  |         |        
|                                  |                                                                       | Realized gains (losses) on open block investments                                                                         |            |   |                                              |   |              |   |           |   |              |   |       |  |         |         | (22,825 | )     
|                                  |                                                                       | Unrealized gains (losses) on open block options and
trading investments                                                   |            |   |                                              |   |              |   |           |   |              |   |       |  |         |         | (76,686 | )     
|                                  |                                                                       | Change in option value of equity-indexed
annuity products and market value
adjustments on total return strategy annuities |            |   |                                              |   |              |   |           |   |              |   |       |  |         |         | 62,068  |       
|                                  |                                                                       | Amortization of DAC and VOBA due to open
block losses                                                                     |            |   |                                              |   |              |   |           |   |              |   |       |  |         |         | 12,858  |       
|                                  |                                                                       | Demutualization costs                                                                                                     |            |   |                                              |   |              |   |           |   |              |   |       |  |         |         | (451    | )     
|                                  |                                                                       | Restructuring costs                                                                                                       |            |   |                                              |   |              |   |           |   |              |   |       |  |         |         | (6,527  | )     
|                                  |                                                                       | Other income from non-insurance operations                                                                                |            |   |                                              |   |              |   |           |   |              |   |       |  |         |         | 1,374   |       
|                                  |                                                                       |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |       |  |         |        
|                                  | Income from continuing operations                                     |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |       |  |         | 111,041 |        
|                                  | Interest (expense)                                                    |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |       |  |         | (20,716 | )      
|                                  | Income tax (expense)                                                  |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |       |  |         | (28,716 | )      
|                                  | Cumulative effect of change in accounting for derivatives, net of tax |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |       |  |         | (8,236  | )      
|                                  |                                                                       |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |       |  |         |        
|                                  |                                                                       |                                                                                                                           | Net income |   |                                              |   |              |   |           |   |              |   |       |  |         |         | $       | 53,373 | 
|                                  |                                                                       |                                                                                                                           |            |   |                                              |   |              |   |           |   |              |   |       |  |         |        

23



---



##### Table of Contents






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

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.

NATURE 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 protection products segment was formerly known as the life
insurance segment and the accumulation products segment was formerly known as
the annuity segment. The primary offerings of the protection products segment
are whole life, 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.

We acquired ILICO which had assets of approximately $6 billion on May 18,
2001. Its operations have been included with ours since that date.

FINANCIAL HIGHLIGHTS

Our financial highlights are as follows:

|                                       |                       |                                   |                                         |        |                                          |        |                                         |        |      |        |         |        |      |         |        |        |      |         | 
|-------------------------------------- | --------------------- | --------------------------------- | --------------------------------------- | ------ | ---------------------------------------- | ------ | --------------------------------------- | ------ | ---- | ------ | ------- | ------ | ---- | ------- | ------ | ------ | ---- | ------- | 
|                                       |                       |                                   |                                         |        | For The Three Months Ended September 30, |        | For The Nine Months Ended September 30,
|                                       |                       |                                   |                                         |        | 2002                                     |        | 2001                                    |        | 2002 |        | 2001   
|                                       |                       |                                   |                                         |        |                                          |        |                                         |        |      |        |        
|                                       |                       |                                   |                                         |        | ($ in thousands, except per share data) 
|Adjusted pre-tax operating income (A): |                       |                                   |                                         |        |                                          |        |                                         |        |      |        |         |        |      |         |        |       
|                                       | Protection Products   |                                   | $                                       | 30,127 |                                          |        | $                                       | 27,246 |      |        | $       | 95,394 |      |         | $      | 66,725 |     
|                                       | Accumulation Products |                                   |                                         | 32,314 |                                          |        |                                         | 25,323 |      |        |         | 90,800 |      |         |        | 71,321 |     
|                                       | Other                 |                                   |                                         | (1,742 | )                                        |        |                                         | 1,319  |      |        |         | (4,732 | )    |         |        | 3,184  |     
|                                       |                       |                                   |                                         |        |                                          |        |                                         |        |      |        |         |        |      |         |        |       
|                                       |                       |                                   | Total adjusted pre-tax operating income |        | $                                        | 60,699 |                                         |        | $    | 53,888 |         |        | $    | 181,462 |        |        | $    | 141,230 | 
|Adjusted net operating income (A)      |                       | $                                 | 36,253                                  |        |                                          | $      | 32,258                                  |        |      | $      | 108,484 |        |      | $       | 80,825 |       
|Net income                             |                       | $                                 | 26,490                                  |        |                                          | $      | 21,510                                  |        |      | $      | 55,667  |        |      | $       | 53,373 |       
|Diluted earnings per share:            |                       |                                   |                                         |        |                                          |        |                                         |        |      |        |         |        |      |         |        |       
|                                       |                       | Adjusted net operating income (A) |                                         | $      | 0.91                                     |        |                                         | $      | 0.77 |        |         | $      | 2.66 |         |        | $      | 2.26 |        
|                                       |                       | Net income                        |                                         | $      | 0.66                                     |        |                                         | $      | 0.51 |        |         | $      | 1.36 |         |        | $      | 1.49 |        

|                                    |  |  |               |            |              |  |   |            | 
|----------------------------------- |  |  | ------------- | ---------- | ------------ |  | - | ---------- | 
|                                    |  |  | September 30, |            | December 31,
|                                    |  |  | 2002          |            | 2001        
|                                    |  |  |               |            |             
|Total assets                        |  |  | $             | 19,692,545 |              |  | $ | 18,299,152 | 
|Stockholders equity (without AOCI) |  |  | $             | 1,180,790  |              |  | $ | 1,225,848  | 



|(A) |  | Adjusted operating income does not constitute net income computed in accordance with accounting principles generally accepted
in the United States, or GAAP. See Adjusted Net Operating Income section for additional information.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Adjusted pre-tax operating income in both of our operating segments
increased in 2002 as compared to the comparable periods in 2001. Growth in our
protection products adjusted pre-tax operating

24



---



##### Table of Contents



income was primarily attributable to the acquisition of ILICO combined
with a slight growth in product margins and a decline in operating expenses.
Our accumulation products pre-tax operating income also increased due to the
acquisition of ILICO, increased Independent Marketing Organizations (IMOs)
operating income and the discontinuation of goodwill amortization.

Net income increased between 2001 and 2002 periods primarily as a result
of the growth in our protection products and accumulation products segments.
Partially offsetting this growth in earnings were increased realized losses on
open block investments and increased net unrealized losses from SFAS 133
related market value adjustments on trading securities, derivatives and certain
annuity contracts. See the Adjusted Net Operating Income section for a further
discussion of the items included in net income but excluded from operating
income.

Total assets increased $1.4 billion during the first nine months of 2002
primarily as a result of the placement of funding agreements totaling $750
million, growth in annuity sales which were partially offset by surrenders, and
increased investment market values.

Stockholders equity, excluding AOCI, declined $45.1 million as a result
of treasury stock purchases of $99.9 million in the first nine months of 2002.
The stock repurchases were partially offset by year-to-date net income of $55.7
million.

ADJUSTED NET OPERATING INCOME

The following table reflects net income adjusted to eliminate certain
items (net of applicable income taxes) which our management believes do not
necessarily indicate overall operating trends. Adjusted net operating income is
the basis we use to assess our overall performance. Adjusted net operating
income as described by us may not be comparable to similarly titled measures
reported by other companies, including insurance companies. The adjusted net
operating income shown below does not constitute net income computed in
accordance with accounting principles generally accepted in the United States,
or GAAP. The adjustments are presented net of income taxes.

25



---



##### Table of Contents



|                                                                               |         |   |                                          |            |                                         |   |        |            |      |   |        |            |  |   |        |            | 
|------------------------------------------------------------------------------ | ------- | - | ---------------------------------------- | ---------- | --------------------------------------- | - | ------ | ---------- | ---- | - | ------ | ---------- |  | - | ------ | ---------- | 
|                                                                               |         |   | For The Three Months Ended September 30, |            | For The Nine Months Ended September 30,
|                                                                               |         |   | 2002                                     |            | 2001                                    |   | 2002   |            | 2001
|                                                                               |         |   |                                          |            |                                         |   |        |            |     
|                                                                               |         |   | ($ in thousands, except per share data) 
|Net Income                                                                     |         | $ | 26,490                                   |            |                                         | $ | 21,510 |            |      | $ | 55,667 |            |  | $ | 53,373 |           
|Open block realized (gains) losses (A)                                         |         |   | 6,825                                    |            |                                         |   | 5,085  |            |      |   | 36,400 |            |  |   | 14,579 |           
|Net amortization of DAC and VOBA
due to open block realized gains
(losses) (B) |         |   | (1,709                                   | )          |                                         |   | (3,101 | )          |      |   | (6,875 | )          |  |   | (5,924 | )         
|Net effect of accounting differences
from the adoption of SFAS 133 (C)         |         |   | 3,284                                    |            |                                         |   | 4,754  |            |      |   | 17,407 |            |  |   | 7,295  |           
|Demutualization costs (D)                                                      |         |   | 722                                      |            |                                         |   | 249    |            |      |   | 1,186  |            |  |   | 451    |           
|Restructuring costs (E)                                                        |         |   | 1,590                                    |            |                                         |   | 4,189  |            |      |   | 6,644  |            |  |   | 4,189  |           
|Other income from non-insurance operations (F)                                 |         |   | (949                                     | )          |                                         |   | (428   | )          |      |   | (1,945 | )          |  |   | (1,374 | )         
|Cumulative effect of change in
accounting for derivatives (G)                  |         |   |                                         |            |                                         |   |       |            |      |   |       |            |  |   | 8,236  |           
|                                                                               |         |   |                                          |            |                                         |   |        |            |      |   |        |            |  |   |        |           
|Adjusted Net Operating Income                                                  |         | $ | 36,253                                   |            |                                         | $ | 32,258 |            |      | $ | 108,48 |            |  | $ | 80,825 |           
|                                                                               |         |   |                                          |            |                                         |   |        |            |      |   |        |            |  |   |        |           
|Adjusted Net Operating Income
per common share:                                |         |   |                                          |            |                                         |   |        |            |      |   |        |            |  |   |        |           
|                                                                               | Basic   |   | $                                        | 0.92       |                                         |   | $      | 0.78       |      |   | $      | 2.69       |  |   | $      | 2.29       | 
|                                                                               |         |   |                                          |            |                                         |   |        |            |      |   |        |            |  |   |        |           
|                                                                               | Diluted |   | $                                        | 0.91       |                                         |   | $      | 0.77       |      |   | $      | 2.66       |  |   | $      | 2.26       | 
|                                                                               |         |   |                                          |            |                                         |   |        |            |      |   |        |            |  |   |        |           
|Weighted average common
shares outstanding:                                    |         |   |                                          |            |                                         |   |        |            |      |   |        |            |  |   |        |           
|                                                                               | Basic   |   |                                          | 39,497,355 |                                         |   |        | 41,536,389 |      |   |        | 40,327,236 |  |   |        | 35,334,160 | 
|                                                                               |         |   |                                          |            |                                         |   |        |            |      |   |        |            |  |   |        |           
|                                                                               | Diluted |   |                                          | 39,835,426 |                                         |   |        | 42,060,929 |      |   |        | 40,812,121 |  |   |        | 35,825,884 | 
|                                                                               |         |   |                                          |            |                                         |   |        |            |      |   |        |            |  |   |        |           



|(A) |  | Represents total open block realized gains or losses on investments.
Open block realized gains or losses may vary widely between periods. Such
amounts are determined by managements timing of individual transactions
or current market conditions and do not necessarily correspond to the
underlying operating trends.                                                           
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(B) |  | Represents amortization of DAC and VOBA on the open block realized gains
or losses that are included in our product margins.                                                                                                                                                                                                                                                         
|   
|(C) |  | Represents the net effect of SFAS 133, Accounting for Derivative
Instruments and Hedging Activities, related accounting entries. The
accounting entries consist of cash flow hedge amortization, market value
adjustments on trading securities, derivatives, certain annuity contracts,
and the associated change in amortization of DAC and VOBA resulting from
such adjustments.
|   
|(D) |  | Represents costs directly related to our demutualizations. The costs
consist primarily of legal, actuarial and consulting expenses.                                                                                                                                                                                                                                                  
|   
|(E) |  | Represents costs of restructuring our operations to eliminate duplicative
functions. The costs consist primarily of relocation of employees,
severance and termination benefits, and systems conversion.                                                                                                                                                                             
|   
|(F) |  | Represents the net income from our residential financing and property
operations which is not part of our core insurance operations.                                                                                                                                                                                                                                                 

26



---



##### Table of Contents





|(G) |  | Represents the cumulative effect of change in accounting for derivatives,
as of January 1, 2001, resulting from our adoption of SFAS 133.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------

The increase in adjusted net operating income in 2002 was primarily
attributable to the acquisition of ILICO which operations have been included in
our consolidated financial statements since May 18, 2001 and the growth in our
Protection Products and Accumulation Products segments as explained in the next
two sections.

PROTECTION PRODUCTS

Our protection products segment consists of whole life, 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 to stock forms of ownership. 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 $78.3 billion at September 30,
2002 and $70.5 billion at December 31, 2001. A summary of our protection
products segment operations follows:

|                                                                |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |         |         | 
|--------------------------------------------------------------- | -------------------------------------------------------------------- | --------------------------- | ------ | ---------------------------------------- | ------- | --------------------------------------- | ------ | ------- | ------- | ---- | ------ | ------- | ------- | - | ------ | ------- | ------- | 
|                                                                |                                                                      |                             |        | For The Three Months Ended September 30, |         | For The Nine Months Ended September 30,
|                                                                |                                                                      |                             |        | 2002                                     |         | 2001                                    |        | 2002    |         | 2001
|                                                                |                                                                      |                             |        |                                          |         |                                         |        |         |         |     
|                                                                |                                                                      |                             |        | ($ in thousands)                        
|Revenues:                                                       |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |        
|                                                                | Insurance premiums                                                   |                             | $      | 77,595                                   |         |                                         | $      | 89,237  |         |      | $      | 255,938 |         |   | $      | 210,669 |        
|                                                                | Universal life product charges                                       |                             |        | 31,662                                   |         |                                         |        | 37,672  |         |      |        | 93,108  |         |   |        | 80,627  |        
|                                                                | Net investment income                                                |                             |        | 84,202                                   |         |                                         |        | 79,822  |         |      |        | 248,044 |         |   |        | 198,147 |        
|                                                                | Closed block realized gains (losses) on investments                  |                             |        | (1,126                                   | )       |                                         |        | 1,889   |         |      |        | (1,880  | )       |   |        | 2,202   |        
|                                                                | Other income                                                         |                             |        | 1,068                                    |         |                                         |        | 1,005   |         |      |        | 3,013   |         |   |        | 1,005   |        
|                                                                |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |         |        
|                                                                |                                                                      | Total revenues              |        |                                          | 193,401 |                                         |        |         | 209,625 |      |        |         | 598,223 |   |        |         | 492,650 | 
|                                                                |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |         |        
|Benefits and expenses:                                          |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |        
|                                                                | Policyowner benefits                                                 |                             |        | 108,406                                  |         |                                         |        | 117,332 |         |      |        | 330,555 |         |   |        | 264,869 |        
|                                                                | Underwriting, acquisition and other expenses                         |                             |        | 15,204                                   |         |                                         |        | 21,567  |         |      |        | 56,148  |         |   |        | 53,618  |        
|                                                                | Amortization of DAC and VOBA, net of open block
gain/loss adjustment |                             |        | 15,287                                   |         |                                         |        | 17,289  |         |      |        | 44,126  |         |   |        | 39,022  |        
|                                                                | Dividends to policyowners                                            |                             |        | 24,377                                   |         |                                         |        | 26,191  |         |      |        | 72,000  |         |   |        | 68,416  |        
|                                                                |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |         |        
|                                                                |                                                                      | Total benefits and expenses |        |                                          | 163,274 |                                         |        |         | 182,379 |      |        |         | 502,829 |   |        |         | 425,925 | 
|                                                                |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |         |        
|Adjusted pre-tax operating income  Protection Products segment |                                                                      | $                           | 30,127 |                                          |         | $                                       | 27,246 |         |         | $    | 95,394 |         |         | $ | 66,725 |        
|                                                                |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |         |        

Adjusted pre-tax operating income from our protection products increased
11% in the third quarter of 2002 and 43% in the first nine months of 2002
compared to the respective 2001 periods. The increases were due to a slight
growth in product margins and a decline in operating expenses with additional
growth for the first nine months attributable to the acquisition of ILICO. The
key drivers of our protection products business include sales, persistency, net
investment income, mortality and expenses.

27



---



##### Table of Contents



Sales, Premiums and Product Charges.Annualized premium for new products
issued represents sales for protection products. The following table
summarizes annualized premium by life insurance product:

|                                      |                               |  |                                          |        |                                         |  |        |        |      |  |        |         |  |  |        |        | 
|------------------------------------- | ----------------------------- |  | ---------------------------------------- | ------ | --------------------------------------- |  | ------ | ------ | ---- |  | ------ | ------- |  |  | ------ | ------ | 
|                                      |                               |  | Sales Activity by Product               
|                                      |                               |  | For The Three Months Ended September 30, |        | For The Nine Months Ended September 30,
|                                      |                               |  | 2002                                     |        | 2001                                    |  | 2002   |        | 2001
|                                      |                               |  |                                          |        |                                         |  |        |        |     
|                                      |                               |  | ($ in thousands)                        
|Traditional life insurance:           |                               |  |                                          |        |                                         |  |        |        |      |  |        |         |  |  |        |       
|                                      | Whole life                    |  | $                                        | 1,468  |                                         |  | $      | 1,255  |      |  | $      | 3,728   |  |  | $      | 4,773  | 
|                                      | Interest-sensitive whole life |  |                                          | 3,427  |                                         |  |        | 3,118  |      |  |        | 24,913  |  |  |        | 5,543  | 
|                                      | Term life                     |  |                                          | 4,246  |                                         |  |        | 3,110  |      |  |        | 12,761  |  |  |        | 6,403  | 
|Universal life                        |                               |  | 9,914                                    |        |                                         |  | 7,519  |        |      |  | 24,639 |         |  |  | 13,220 |       
|Equity-indexed life                   |                               |  | 9,277                                    |        |                                         |  | 5,901  |        |      |  | 30,037 |         |  |  | 16,626 |       
|                                      |                               |  |                                          |        |                                         |  |        |        |      |  |        |         |  |  |        |       
|Direct first year annualized premiums |                               |  | 28,332                                   |        |                                         |  | 20,903 |        |      |  | 96,078 |         |  |  | 46,565 |       
|Private label term life premiums      |                               |  | 2,071                                    |        |                                         |  | 1,556  |        |      |  | 6,715  |         |  |  | 2,289  |       
|                                      |                               |  |                                          |        |                                         |  |        |        |      |  |        |         |  |  |        |       
|                                      | Total                         |  | $                                        | 30,403 |                                         |  | $      | 22,459 |      |  | $      | 102,793 |  |  | $      | 48,854 | 
|                                      |                               |  |                                          |        |                                         |  |        |        |      |  |        |         |  |  |        |       

Direct first year annualized premiums increased 36% in the third quarter
of 2002 compared to the same period in 2001. On a year-to-date basis the
increase was 106% primarily due to the acquisition of ILICO which was acquired
during the second quarter of 2001. Excluding the sales from ILICO, life
insurance sales increased 40% for the year-to-date period as compared to 2001.
We experienced growth in almost all our protection product lines with
significant increases coming from our universal life and equity-indexed life
products. The equity-indexed life product allows the policyowner to elect an
earnings strategy for a portion of the account value whereby earnings are
credited based on increases in the S&P 500 Index, excluding dividends. The
earnings credit is subject to a participation rate and an annual cap. In the
first nine months of 2002, sales of these products were $30.0 million as
compared to $16.6 million for the same period a year ago. We are a leading
writer of equity-indexed life products in the United States.

We also distribute term products of ILICO through strategic alliances with
private label partners. Under private label arrangements, ILICO designs and
issues products that are distributed through other life insurance companies,
our private label partners. ILICO reinsures a portion of the risks on those
products which we refer to as our private label sales. We have two private
label partners that are actively writing new business. During the second
quarter of 2002, we ceased recruiting new private label partners.

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. All revenue is
reported net of reinsurance ceded.

Insurance premium revenue and product charge revenue was lower in the
third quarter of 2002 as compared to the third quarter of 2001 primarily due to
reinsurance agreements in place which have decreased revenue. For the nine
month period ended September 30, 2002, insurance premium and product charge
revenue both increased as compared to a year ago primarily due to the
acquisition of ILICO.

28



---



##### Table of Contents



Persistency.Annualized lapse rates were as follows:

|            |                 |  |                                         |      |      |  |  |      |  
|----------- | --------------- |  | --------------------------------------- | ---- | ---- |  |  | ---- | -
|            |                 |  | For The Nine Months Ended September 30,
|            |                 |  | 2002                                    |      | 2001
|            |                 |  |                                         |      |     
|Lapse rate: |                 |  |                                         |      |      |  |  |     
|            | Including ILICO |  |                                         | 7.52 | %    |  |  | 7.43 | %
|            | Excluding ILICO |  |                                         | 6.64 | %    |  |  | 7.54 | %

Our persistency experience remained within our pricing assumptions. Our
lapse rate including ILICO for the first nine months of 2002 as compared to
2001 increased as expected due to the completion of ILICOs demutualization
payout in July 2001. Lapses tend to decline in anticipation of a
demutualization transaction as policyholders want to remain policyholders so
they will be eligible for the demutualization payout. Following a
demutualization, lapses tend to increase for a period before they return to a
more normal level. Our 2002 lapse rate excluding ILICO decreased compared to
the first nine months of 2001. We experienced higher lapse rates following the
completion of a demutualization in the third quarter of 2000.

Net Investment Income.Net investment income increased both for the three
month and nine month periods ending September 30, 2002 as compared to the same
periods a year ago. The increase for the year-to-date period was primarily
attributable to the acquisition of ILICO while the increase for the
quarter-to-date period was primarily due to growth in assets, partially offset
by lower effective yields as compared to 2001. The year-to-date effective yield
of the investment portfolio was 7.17% compared to 7.30% a year ago.

Mortality and Benefit Expense.We experienced unfavorable mortality in
the third quarter of 2002 as compared to the same period a year ago. However,
due to the reinsurance arrangements we have in place for mortality, policyowner
benefits actually declined between third quarter periods. On a year-to-date
basis, we experienced favorable mortality, but due to the acquisition of ILICO,
total benefit expense is higher than in the prior year.

Underwriting, Acquisition and Other Expenses.Expenses decreased for the
third quarter of 2002 compared to the third quarter of 2001 primarily due to
increased reimbursement from reinsurers of commission and expense allowances as
more policies are subject to reinsurance and from expense structure changes
resulting from the integration with ILICO. For the year-to-date period,
decreases in commission and expense allowances from reinsurance and from
expense integration were more than offset by the increase resulting from the
acquisition of ILICO.

Outlook.We expect to continue 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 and centralization
of our administrative functions.

29



---



##### Table of Contents



ACCUMULATION PRODUCTS

Our accumulation products segment primary offerings consist of individual
fixed annuities marketed on a national basis primarily through independent
brokers and IMOs and insurance contracts issued through funding agreements.
Similar to our protection products segment, we invest the deposits we receive
from accumulation product sales 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 $11.0 billion
at September 30, 2002 and $10.7 billion at December 31, 2001. A summary of our
accumulation products segment operations follows:

|                                                                  |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |         |         | 
|----------------------------------------------------------------- | -------------------------------------------------------------------- | --------------------------- | ------ | ---------------------------------------- | ------- | --------------------------------------- | ------ | ------- | ------- | ---- | ------ | ------- | ------- | - | ------ | ------- | ------- | 
|                                                                  |                                                                      |                             |        | For The Three Months Ended September 30, |         | For The Nine Months Ended September 30,
|                                                                  |                                                                      |                             |        | 2002                                     |         | 2001                                    |        | 2002    |         | 2001
|                                                                  |                                                                      |                             |        |                                          |         |                                         |        |         |         |     
|                                                                  |                                                                      |                             |        | ($ in thousands)                        
|Revenues:                                                         |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |        
|                                                                  | Immediate annuity and supplementary contract premiums                |                             | $      | 674                                      |         |                                         | $      | 3,022   |         |      | $      | 6,854   |         |   | $      | 10,216  |        
|                                                                  | Annuity product charges                                              |                             |        | 10,545                                   |         |                                         |        | 9,735   |         |      |        | 31,284  |         |   |        | 25,893  |        
|                                                                  | Net investment income                                                |                             |        | 167,054                                  |         |                                         |        | 148,944 |         |      |        | 491,941 |         |   |        | 414,816 |        
|                                                                  | Other income                                                         |                             |        | 2,938                                    |         |                                         |        | 1,977   |         |      |        | 8,741   |         |   |        | 7,206   |        
|                                                                  |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |         |        
|                                                                  |                                                                      | Total revenues              |        |                                          | 181,211 |                                         |        |         | 163,678 |      |        |         | 538,820 |   |        |         | 458,131 | 
|                                                                  |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |         |        
|Benefits and expenses:                                            |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |        
|                                                                  | Policyowner benefits                                                 |                             |        | 120,440                                  |         |                                         |        | 106,787 |         |      |        | 366,203 |         |   |        | 301,021 |        
|                                                                  | Underwriting, acquisition and other expenses                         |                             |        | 8,394                                    |         |                                         |        | 12,229  |         |      |        | 23,826  |         |   |        | 30,784  |        
|                                                                  | Amortization of DAC and VOBA, net of open block gain/loss
adjustment |                             |        | 24,618                                   |         |                                         |        | 21,302  |         |      |        | 69,228  |         |   |        | 60,348  |        
|                                                                  |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |         |        
|                                                                  |                                                                      | Total benefits and expenses |        |                                          | 153,452 |                                         |        |         | 140,318 |      |        |         | 459,257 |   |        |         | 392,153 | 
|                                                                  |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |         |        
|IMO Operations:                                                   |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |        
|                                                                  | Other income                                                         |                             |        | 13,583                                   |         |                                         |        | 6,883   |         |      |        | 36,221  |         |   |        | 19,790  |        
|                                                                  | Other expenses                                                       |                             |        | 9,028                                    |         |                                         |        | 4,920   |         |      |        | 24,984  |         |   |        | 14,447  |        
|                                                                  |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |         |        
|                                                                  |                                                                      | Net IMO operating income    |        |                                          | 4,555   |                                         |        |         | 1,963   |      |        |         | 11,237  |   |        |         | 5,343   | 
|                                                                  |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |         |        
|Adjusted pre-tax operating income  Accumulation Products segment |                                                                      | $                           | 32,314 |                                          |         | $                                       | 25,323 |         |         | $    | 90,800 |         |         | $ | 71,321 |        
|                                                                  |                                                                      |                             |        |                                          |         |                                         |        |         |         |      |        |         |         |   |        |         |        

Adjusted pre-tax operating income from our accumulation products
operations increased 28% in the third quarter of 2002 and 27% in the first nine
months of 2002 compared to the respective 2001 periods primarily due to the
acquisition of ILICO in 2001, increased Independent Marketing Organizations
(IMOs) operating income and the discontinuation of goodwill amortization. The
drivers of profitability in our accumulation products business are sales,
persistency, investment spread, expenses and IMO operations.

30



---



##### Table of Contents



Sales and Product Charges.Deposits we receive for annuities or funding
agreements represent sales for accumulation products. The following table
summarizes our accumulation products segment deposits:

|                                   |                 |                    |                              |         |                                          |         |                                         |         |        |         |           |           |       |           |           |           |        |           | 
|---------------------------------- | --------------- | ------------------ | ---------------------------- | ------- | ---------------------------------------- | ------- | --------------------------------------- | ------- | ------ | ------- | --------- | --------- | ----- | --------- | --------- | --------- | ------ | --------- | 
|                                   |                 |                    |                              |         | Deposits by Product                     
|                                   |                 |                    |                              |         | For The Three Months Ended September 30, |         | For The Nine Months Ended September 30,
|                                   |                 |                    |                              |         | 2002                                     |         | 2001                                    |         | 2002   |         | 2001     
|                                   |                 |                    |                              |         |                                          |         |                                         |         |        |         |          
|                                   |                 |                    |                              |         | ($ in thousands)                        
|Annuities                          |                 |                    |                              |         |                                          |         |                                         |         |        |         |           |           |       |           |           |          
|                                   |                 | Fixed annuities:   |                              |         |                                          |         |                                         |         |        |         |           |           |       |           |          
|                                   |                 |                    | Deferred fixed annuities     |         | $                                        | 311,857 |                                         |         | $      | 261,033 |           |           | $     | 782,248   |           |           | $      | 992,024   | 
|                                   |                 |                    | Equity-indexed annuities     |         |                                          | 161,185 |                                         |         |        | 167,897 |           |           |       | 487,828   |           |           |        | 391,894   | 
|                                   |                 | Variable annuities |                              |         | 1,561                                    |         |                                         |         | 12,428 |         |           |           | 6,042 |           |           |           | 16,625 |          
|                                   |                 |                    |                              |         |                                          |         |                                         |         |        |         |           |           |       |           |           |          
|                                   | Total annuities |                    |                              | 474,603 |                                          |         |                                         | 441,358 |        |         |           | 1,276,118 |       |           |           | 1,400,543 |       
|Funding agreements                 |                 |                    | 400,000                      |         |                                          |         |                                        |         |        |         | 750,000   |           |       |           |          |          
|                                   |                 |                    |                              |         |                                          |         |                                         |         |        |         |           |           |       |           |           |          
|                                   |                 |                    | Direct accumulation products |         |                                          | 874,603 |                                         |         |        | 441,358 |           |           |       | 2,026,118 |           |           |        | 1,400,543 | 
|Reinsurance ceded                  |                 |                    | (49,593                      | )       |                                          |         | (66,232                                 | )       |        |         | (53,975   | )         |       |           | (170,965  | )        
|                                   |                 |                    |                              |         |                                          |         |                                         |         |        |         |           |           |       |           |           |          
|Total deposits, net of reinsurance |                 | $                  | 825,010                      |         |                                          | $       | 375,126                                 |         |        | $       | 1,972,143 |           |       | $         | 1,229,578 |          
|                                   |                 |                    |                              |         |                                          |         |                                         |         |        |         |           |           |       |           |           |          

Direct accumulation product sales increased 98% for the third quarter of
2002 compared to the same quarter a year ago. For the nine month period ended
September 30, 2002, sales increased 45%. Total annuity sales increased 8% for
the quarter and decreased 9% year-to-date. The year-to-date decrease resulted
from the deployment of capital to funding agreements which provide a higher
return on equity.

We placed fixed rate funding agreements totaling $400 million and $750
million in the third quarter and first nine 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 September 30, 2002
amounted to $1 billion.

Through our acquisition of ILICO, we obtained a variable annuity product
line. In the first quarter of 2002, we ceased new sales of these products,
except for new policies issued as part of existing employer-sponsored qualified
plan contracts. All sales were discontinued effective September 30, 2002. Our
agents will be encouraged to make new sales of variable annuities through AMAL Corporation.
As these sales will be through our joint venture, they will not appear in our
direct sales amounts. The assets and liabilities related to the direct
variable annuities are shown on the consolidated balance sheets as separate
account assets and separate account liabilities.

During 2001, we had a reinsurance agreement which ceded 35% of certain
fixed annuity production on a modified coinsurance basis. Fixed annuity
production ceded under this agreement totaled approximately $59.4 million and
$160.1 million in the third quarter and first nine months of 2001,
respectively. In the fourth quarter of 2001, the agreement was cancelled and
the previously ceded premiums were recaptured. In the third quarter of 2002,
we entered into a new modified coinsurance reinsurance agreement to cede 25% of
certain equity-indexed annuity products.

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
increased in 2002 as compared to 2001 due to the growth in business and the
acquisition of ILICO.

Persistency.Withdrawals represent funds taken out of accumulation products by
policyowners not including those due to the death of policyowners. Annuity withdrawal rates both with and without
internal replacements continued to improve in 2002. Annuity withdrawals and
annualized annuity withdrawal rates were as follows:

31



---



##### Table of Contents



|                                     |                                              |                 |   |                                         |       |      |   |       |       |  
|------------------------------------ | -------------------------------------------- | --------------- | - | --------------------------------------- | ----- | ---- | - | ----- | ----- | -
|                                     |                                              |                 |   | For The Nine Months Ended September 30,
|                                     |                                              |                 |   | 2002                                    |       | 2001
|                                     |                                              |                 |   |                                         |       |     
|Annuity withdrawal rates:            |                                              |                 |   |                                         |       |      |   |      
|                                     | Withdrawals including internal replacements: |                 |   |                                         |       |      |   |       |      
|                                     |                                              | Including ILICO |   |                                         | 11.62 | %    |   |       | 14.36 | %
|                                     |                                              | Excluding ILICO |   |                                         | 7.91  | %    |   |       | 12.75 | %
|                                     | Withdrawals excluding internal replacements: |                 |   |                                         |       |      |   |       |      
|                                     |                                              | Including ILICO |   |                                         | 11.09 | %    |   |       | 12.74 | %
|                                     |                                              | Excluding ILICO |   |                                         | 7.16  | %    |   |       | 10.37 | %
|Annuity withdrawals ($ in millions): |                                              |                 |   |                                         |       |      |   |      
|                                     | Including ILICO                              |                 | $ | 1,224.9                                 |       |      | $ | 896.8 |      
|                                     | Excluding ILICO                              |                 | $ | 673.2                                   |       |      | $ | 689.1 |      

Our withdrawal experience remained within our pricing assumptions.
Withdrawal rates declined for the first nine months of 2002 as compared to 2001
as our annuity products provide a favorable investment return in this current
low interest rate and declining equity market environment.

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

|                       |  |                                         |      |      |  |  |      |  
|---------------------- |  | --------------------------------------- | ---- | ---- |  |  | ---- | -
|                       |  | For The Nine Months Ended September 30,
|                       |  | 2002                                    |      | 2001
|                       |  |                                         |      |     
|Investment yield       |  |                                         | 6.71 | %    |  |  | 7.10 | %
|Average crediting rate |  |                                         | 4.66 | %    |  |  | 5.07 | %
|                       |  |                                         |      |      |  |  |      |  
|Investment spread      |  |                                         | 2.05 | %    |  |  | 2.03 | %
|                       |  |                                         |      |      |  |  |      |  

The investment spread on deferred fixed annuities increased 2 basis points
to 205 basis points in the first nine months of 2002 compared to the first nine
months of 2001. Crediting rates were lowered in the fourth quarter of 2001 and
in the first three quarters of 2002 to correspond with the decline in
investment yields caused by lower rates on new and reinvested funds. At
September 30, 2002, the account value of deferred fixed annuities totaled $6.8
billion of which $0.9 billion did not have a differential between the credited
rate and minimum guarantee rate and could not be lowered. Additionally,
deferred fixed annuities with account values totaling $1.4 billion have
multi-year interest rate guarantees for which the credited rate cannot
currently be decreased until the end of the multi-year period. At the end of the multi-year guarantee period, the difference
between the guaranteed rate and the minimum guaranteed rate will be more than 200
basis points. Also, at September 30, 2002, account values of equity-indexed
annuities totaled $3.4 billion which provide guaranteed rates based on a
cumulative floor over the term of the product.

Underwriting, Acquisition and Other Expenses.Expenses decreased for the
third quarter of 2002 compared to the third quarter of 2001 primarily due to
goodwill no longer being amortized effective

32



---



##### Table of Contents



January 1, 2002 with the adoption of SFAS 142. Goodwill amortization
amounted to $2.5 million in the third quarter of 2001 and $6.3 million in the
first nine months of 2001.

IMO Operations.We own five IMOs. These 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. The income from IMO operations primarily represents annuity
commissions received by our IMOs from those third party insurance companies.
Net IMO operating income increased $2.6 million in the third quarter of 2002
and $5.9 million in the first nine months of 2002 compared to the respective
2001 periods due to our acquisition of an IMO in the second quarter of 2002.

Outlook.We anticipate continued increased product sales from our IMOs
and multiple distribution channels and a continuing shift of our product mix to
higher return products, in particular the equity-indexed annuity products. We
also expect to continue to manage our spreads in order to achieve our desired
profitability.

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 2002 as compared to the adjusted pre-tax operating
income in 2001 is primarily due to the decline in investment fee income for
asset management services provided to ILICO prior to the acquisition amounting
to $2.8 million in the first nine months of 2001. After the acquisition of
ILICO, such fees are eliminated with expenses in consolidation. In addition,
real estate investment and management fee income has declined as we reduce
these investment holdings.

33



---



##### Table of Contents



INCOME STATEMENT RECONCILIATION

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

|                                                                      |                                                                   |                                                                                                                                      |                                         |        |                                          |        |                                         |        |         |        |         |        |         |         |         |        |         |         | 
|--------------------------------------------------------------------- | ----------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------- | ------ | ---------------------------------------- | ------ | --------------------------------------- | ------ | ------- | ------ | ------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | 
|                                                                      |                                                                   |                                                                                                                                      |                                         |        | For The Three Months Ended September 30, |        | For The Nine Months Ended September 30,
|                                                                      |                                                                   |                                                                                                                                      |                                         |        | 2002                                     |        | 2001                                    |        | 2002    |        | 2001   
|                                                                      |                                                                   |                                                                                                                                      |                                         |        |                                          |        |                                         |        |         |        |        
|                                                                      |                                                                   |                                                                                                                                      |                                         |        | ($ in thousands)                        
|Adjusted pre-tax operating income:                                    |                                                                   |                                                                                                                                      |                                         |        |                                          |        |                                         |        |         |        |         |        |         |         |         |       
|                                                                      | Protection Products                                               |                                                                                                                                      | $                                       | 30,127 |                                          |        | $                                       | 27,246 |         |        | $       | 95,394 |         |         | $       | 66,725 |        
|                                                                      | Accumulation Products                                             |                                                                                                                                      |                                         | 32,314 |                                          |        |                                         | 25,323 |         |        |         | 90,800 |         |         |         | 71,321 |        
|                                                                      | Other operations                                                  |                                                                                                                                      |                                         | (1,742 | )                                        |        |                                         | 1,319  |         |        |         | (4,732 | )       |         |         | 3,184  |        
|                                                                      |                                                                   |                                                                                                                                      |                                         |        |                                          |        |                                         |        |         |        |         |        |         |         |         |       
|                                                                      |                                                                   |                                                                                                                                      | Total adjusted pre-tax operating income |        |                                          | 60,699 |                                         |        |         | 53,888 |         |        |         | 181,462 |         |        |         | 141,230 | 
|Non-operating increases (decreases) to income:                        |                                                                   |                                                                                                                                      |                                         |        |                                          |        |                                         |        |         |        |         |        |         |         |         |       
|                                                                      | Realized and unrealized gains (losses) on assets and liabilities: |                                                                                                                                      |                                         |        |                                          |        |                                         |        |         |        |         |        |         |         |         |        |        
|                                                                      |                                                                   | Realized gains (losses) on open block investments                                                                                    |                                         |        | (10,506                                  | )      |                                         |        | (8,161  | )      |         |        | (56,139 | )       |         |        | (22,825 | )      
|                                                                      |                                                                   | Unrealized gains (losses) on open block options and
trading investments                                                              |                                         |        | (10,319                                  | )      |                                         |        | (39,030 | )      |         |        | (64,555 | )       |         |        | (76,686 | )      
|                                                                      |                                                                   | Fair value change in option value of equity-indexed annuity
products and market value adjustments on total return
strategy annuities |                                         |        | 5,242                                    |        |                                         |        | 29,559  |        |         |        | 41,110  |         |         |        | 62,068  |        
|                                                                      |                                                                   | Cash flow hedge amortization                                                                                                         |                                         |        | (1,961                                   | )      |                                         |        |        |        |         |        | (2,659  | )       |         |        |        |        
|                                                                      |                                                                   | Amortization of DAC & VOBA due to open block realized
gains (losses)                                                                 |                                         |        | 4,616                                    |        |                                         |        | 7,321   |        |         |        | 9,902   |         |         |        | 12,858  |        
|                                                                      | Non-recurring expenses:                                           |                                                                                                                                      |                                         |        |                                          |        |                                         |        |         |        |         |        |         |         |         |        |        
|                                                                      |                                                                   | Demutualization costs                                                                                                                |                                         |        | (722                                     | )      |                                         |        | (249    | )      |         |        | (1,186  | )       |         |        | (451    | )      
|                                                                      |                                                                   | Restructuring costs                                                                                                                  |                                         |        | (2,569                                   | )      |                                         |        | (6,527  | )      |         |        | (10,780 | )       |         |        | (6,527  | )      
|                                                                      | Other income from non-insurance operations                        |                                                                                                                                      |                                         | 2,272  |                                          |        |                                         | 428    |         |        |         | 3,268  |         |         |         | 1,374  |        
|                                                                      |                                                                   |                                                                                                                                      |                                         |        |                                          |        |                                         |        |         |        |         |        |         |         |         |       
|                                                                      |                                                                   |                                                                                                                                      | Income from continuing operations       |        |                                          | 46,752 |                                         |        |         | 37,229 |         |        |         | 100,423 |         |        |         | 111,041 | 
|Interest (expense)                                                    |                                                                   |                                                                                                                                      | (6,414                                  | )      |                                          |        | (5,974                                  | )      |         |        | (18,778 | )      |         |         | (20,716 | )     
|Income tax (expense)                                                  |                                                                   |                                                                                                                                      | (13,848                                 | )      |                                          |        | (9,745                                  | )      |         |        | (25,978 | )      |         |         | (28,716 | )     
|                                                                      |                                                                   |                                                                                                                                      |                                         |        |                                          |        |                                         |        |         |        |         |        |         |         |         |       
|                                                                      |                                                                   |                                                                                                                                      | Net income from continuing operations   |        |                                          | 26,490 |                                         |        |         | 21,510 |         |        |         | 55,667  |         |        |         | 61,609  | 
|Cumulative effect of change in accounting for derivatives,
net of tax |                                                                   |                                                                                                                                      |                                        |        |                                          |        |                                        |        |         |        |        |        |         |         | (8,236  | )     
|                                                                      |                                                                   |                                                                                                                                      |                                         |        |                                          |        |                                         |        |         |        |         |        |         |         |         |       
|                                                                      |                                                                   |                                                                                                                                      | Net income                              |        | $                                        | 26,490 |                                         |        | $       | 21,510 |         |        | $       | 55,667  |         |        | $       | 53,373  | 
|                                                                      |                                                                   |                                                                                                                                      |                                         |        |                                          |        |                                         |        |         |        |         |        |         |         |         |        |        

Realized and Unrealized Losses on Assets and Liabilities.Realized losses
on open block investments in the first nine months of 2002 consisted primarily
of realized losses and writedowns on investments related to WorldCom, Inc. and
its related entities. The level of realized gains and losses will fluctuate
from period to period depending on the prevailing interest rate, the economic
environment and the timing of investment sales.

Unrealized losses on open block trading 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 deteriorating stock market
conditions, resulted in an unrealized loss of $13.0 million and $47.8 million
in the third quarter and first nine months of 2002, respectively, and $28.4
million and $62.2 million in the third quarter and first nine months of 2001,
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 $2.7 million and a loss of $16.8
million in the third quarter and first nine months of 2002, respectively, and a
loss of $10.6 million and $14.5 million for the third quarter and first nine
months of 2001, 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 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, which we adopted
January 1, 2001. As previously discussed, these fair value changes are offset

34



---



##### Table of Contents



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.
The reduction in such annuity contract expense is less than the decline in
investment income primarily due to minimum guaranteed interest rates.

Non-recurring Expenses.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 were previously planned to be
performed in Indianapolis, Indiana; Des Moines; or Woodbury, New York;
however, it has now been determined that these processes will be transitioned
so they are performed in Des Moines, Woodbury, or outsourced. This will result
in the elimination of additional positions in Indianapolis. Accumulation
products functions are being transitioned to Topeka. Investment activities
have been restructured to eliminate certain real estate management services
which have been outsourced.

The restructuring charges expensed in the third quarter of 2002 included
pre-tax severance and termination benefits of $0.2 million related to the
elimination of approximately 5 positions and other pre-tax costs of $2.4
million primarily related to systems conversion and relocation of employees.
For the first nine months of 2002, restructuring charges included pre-tax
severance and termination benefits of $5.5 related to the elimination of
approximately 90 positions and other pre-tax costs of $5.3 million. An accrual
for severance and termination benefits not yet paid amounted to $2.8 million at
September 30, 2002. Additional charges will be incurred for
continuing restructuring activities primarily involving severance or
relocation benefits for affected employees, various administrative,
financial and actuarial system conversion costs, and building
disposition costs. System conversion costs will be expensed as incurred and are expected to be
substantially completed by the fourth quarter of 2003. A majority of the
severance costs due to the transition of the protection products processes from
Indianapolis to Des Moines, Woodbury or to be outsourced will be accrued in the fourth
quarter of 2002.

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 and interest income 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 regulator 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 2001 results, our life
insurance subsidiaries could pay us an estimated $80.5 million in dividends in
2002 without obtaining regulatory approval. Our subsidiaries paid us $10
million in the first nine months of 2002. Prior to making dividends from the
insurance subsidiaries, we also consider risk-based capital levels, capital
and liquidity operating needs, and other factors.

35



---



##### Table of Contents



We have a $175 million revolving credit facility with a syndicate of
lenders (which we refer to as the Revolving Credit Agreement). As of September
30, 2002, there was a $101 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.

On March 6, 2002, we issued and sold in a private placement $185 million
aggregate original principal amount of OCEANs. The OCEANs are senior
subordinated debt and were issued and sold in an original principal amount of
$1,000 per OCEAN, with a principal amount at maturity of $1,270 per OCEAN. The
maturity date of the OCEANs is March 6, 2032. The OCEANs will have aggregate
principal amount at maturity of $235 million. The notes are convertible into
shares of AmerUs Group Co.s common stock at an initial conversion price
(subject to adjustment) of $37.60 per share only if the sale price of the
common stock exceeds $47.85 per share for at least 20 trading days in a 30-day
trading period or in certain other limited circumstances.

Proceeds from the OCEANs were used to repay borrowings on the Revolving
Credit Agreement and to purchase approximately 1.7 million shares amounting to
$59 million of AmerUs Group Co.s common stock. The OCEANs are senior
subordinated debt, subordinated in right of payment to all existing and future
senior debt and senior to all existing and future junior subordinated debt.

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. We plan to fund the purchase
program from a combination of our internal sources, dividends from insurance
subsidiaries and Revolving Credit Agreement. We have repurchased shares in the
first six months of 2002 under prior purchase programs. During the first six
months of 2002, 2.5 million shares were repurchased and were primarily funded
by approximately $59 million from the OCEANs offering and approximately $30
million from the Revolving Credit Agreement. During the third quarter of 2002,
approximately 0.7 million shares were repurchased and were primarily funded by
approximately $23 million from the Revolving Credit Agreement.

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 anticipates that funds to meet short-term and long-term capital
expenditures, cash dividends to shareholders and operating cash needs will come
from existing capital and internally generated funds. Management believes that
the current level of cash and available-for-sale and short-term

36



---



##### Table of Contents



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 life insurance and annuity products. 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 liabilities for interest-sensitive life
products and annuities by their contractual withdrawal provisions at September
30, 2002 (including liabilities in the closed blocks and the general account):

|                                                        |                                 |   |                 |          | 
|------------------------------------------------------- | ------------------------------- | - | --------------- | -------- | 
|                                                        |                                 |   | ($ in millions)
|                                                        |                                 |   |                
|Not subject to discretionary withdrawal                 |                                 | $ | 491.4           |         
|Subject to discretionary withdrawal with adjustments:   |                                 |   |                 |         
|                                                        | Specified surrender charges (A) |   |                 | 7,371.0  | 
|                                                        | Market value adjustments        |   |                 | 2,976.5  | 
|                                                        |                                 |   |                 |         
|                                                        | Subtotal                        |   |                 | 10,347.5 | 
|                                                        |                                 |   |                 |         
|Subject to discretionary withdrawal without adjustments |                                 |   | 1,887.4         |         
|                                                        |                                 |   |                 |         
|Total                                                   |                                 | $ | 12,726.3        |         
|                                                        |                                 |   |                 |         



|(A) |  | Includes $1,243.4 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 the first nine months of 2002, our insurance subsidiaries
placed additional funding agreements totaling $750 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

37



---



##### Table of Contents



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.

In addition, there are 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 $233.6 million at September 30, 2002. 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 Investors Life Insurance Company,
Inc. 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 September 30, 2002.
In addition, ALIC has long-term fixed rate advances from FHLB outstanding of
$14.0 million at September 30, 2002.

The insurance subsidiaries may also obtain liquidity through sales of
investments. The investment portfolio as of September 30, 2002 had a carrying
value of $16.4 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.

At September 30, 2002, the statutory surplus of the insurance subsidiaries
was approximately $650 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 and asset/liability 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 and, to a lesser extent, 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
surrenders

38



---



##### Table of Contents



and 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
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 only 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 table below provides information about our fixed maturity investments
and mortgage loans for both our trading and other than trading portfolios at
September 30, 2002. The table presents cash flows of principal amounts and
related weighted average interest rates by expected maturity dates. 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.

|                                                    |  |                     |     |      |  |      |       |      |  |      |       |      |  |            |       |      |  |            |       |   |  |   |       |   |  |   |       |   |  |   |        |  |  |   |        | 
|--------------------------------------------------- |  | ------------------- | --- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | ---------- | ----- | ---- |  | ---------- | ----- | - |  | - | ----- | - |  | - | ----- | - |  | - | ------ |  |  | - | ------ | 
|September 30, 2002                                  |  |                     |     |      |  |      |       |      |  |      |       |      |  |            |       |      |  |            |       |   |  |   |       |   |  |   |       |   |  |   |        |  |  |   |        | 
|                                                    |  | Expected Cash Flows
|                                                    |  | 3 months            |     |      |  |      |       |      |  |      |       |      |  |            |       |      |  |            |       |   |  |   |       |   |  |   |       |   |  |   |        |  |  |  
|Amortized Cost                                      |  | 2002                |     | 2003 |  | 2004 |       | 2005 |  | 2006 |       | 2007 |  | Thereafter |       | Cost |  | Fair Value
|                                                    |  |                     |     |      |  |      |       |      |  |      |       |      |  |            |       |      |  |           
|                                                    |  | ($ in millions)    
|Fixed maturity securities
available-for-sale        |  | $                   | 354 |      |  | $    | 1,454 |      |  | $    | 1,231 |      |  | $          | 1,255 |      |  | $          | 1,051 |   |  | $ | 1,148 |   |  | $ | 5,883 |   |  | $ | 12,376 |  |  | $ | 12,809 | 
|Average interest rate                               |  |                     | 6.4 | %    |  |      | 6.2   | %    |  |      | 6.0   | %    |  |            | 6.8   | %    |  |            | 6.6   | % |  |   | 6.7   | % |  |   | 6.7   | % |  |   |        |  |  |   |        | 
|Fixed maturity securities
held for trading purposes |  | $                   | 57  |      |  | $    | 109   |      |  | $    | 235   |      |  | $          | 273   |      |  | $          | 156   |   |  | $ | 137   |   |  | $ | 890   |   |  | $ | 1,857  |  |  | $ | 1,857  | 
|Average interest rate                               |  |                     | 2.9 | %    |  |      | 5.2   | %    |  |      | 3.9   | %    |  |            | 3.0   | %    |  |            | 3.5   | % |  |   | 3.3   | % |  |   | 5.1   | % |  |   |        |  |  |   |        | 
|Mortgage loans                                      |  | $                   | 12  |      |  | $    | 53    |      |  | $    | 68    |      |  | $          | 67    |      |  | $          | 66    |   |  | $ | 64    |   |  | $ | 590   |   |  | $ | 920    |  |  | $ | 1,019  | 
|Average interest rate                               |  |                     | 7.8 | %    |  |      | 8.1   | %    |  |      | 8.1   | %    |  |            | 8.0   | %    |  |            | 8.0   | % |  |   | 7.9   | % |  |   | 7.8   | % |  |   |        |  |  |   |        | 
|Total                                               |  | $                   | 423 |      |  | $    | 1,616 |      |  | $    | 1,534 |      |  | $          | 1,595 |      |  | $          | 1,273 |   |  | $ | 1,349 |   |  | $ | 7,363 |   |  | $ | 15,153 |  |  | $ | 15,685 | 
|                                                    |  |                     |     |      |  |      |       |      |  |      |       |      |  |            |       |      |  |            |       |   |  |   |       |   |  |   |       |   |  |   |        |  |  |   |        | 

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 68% 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%
of the bond portfolio is below investment grade. Fixed maturity securities
have an average maturity of approximately 6.89 years.

39



---



##### Table of Contents



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 are less subject to 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.

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 within 90 days prior to the filing date of 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-14(c) 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.

40



---



##### 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 involved in
litigation, 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.

Previously, the
Company disclosed it was  aware of a dispute between the
retrocessionaire and the reinsurer of a block of annuity business written by IL
Annuity and Insurance Company (IL Annuity), a subsidiary of ILICo, as well as
potential claims of the Reinsurer against IL Annuity. Recently, the reinsurer
informally notified the Company of its intention to arbitrate a claim.
Subsequent to receiving this notice, the Company was informed that the
retrocessionaires claim for breach of contract against the reinsurer was
denied. While it is not feasible to predict the outcome of any claims by the
reinsurer against IL Annuity, the Company believes, based upon currently
available information, that the ultimate liability, if any, with
respect to these claims would not have a material adverse
effect on the Companys consolidated financial position or results of
operations.




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
September 30, 2002:



| |                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | Form 8-K dated August 6, 2002 announcing the release of second
quarter 2002 earnings. Supplemental financial information of
AmerUs Group Co. was attached.



| |                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Form 8-K dated August 12, 2002 providing Chief Executive Officer
and Chief Financial Officer certifications pursuant to Section 1350
of Chapter 63 of Title 18 of the United States Code.

41



---



##### 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: |  | November 13, 2002 |  |    |  | AMERUS GROUP CO.                                                                  
|       |  |                   |  |    |  |                                                                                   
|       |  |                   |  | By |  | /s/ Melinda S. Urion                                                              
|       |  |                   |  |    |  |                                                                                   
|       |  |                   |  |    |  | Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
|       |  |                   |  |    |  |                                                                                   
|       |  |                   |  | By |  | /s/ Brenda J. Cushing                                                             
|       |  |                   |  |    |  |                                                                                   
|       |  |                   |  |    |  | Senior Vice President and Controller
(Principal Accounting Officer)               

42



---



##### Table of Contents






CERTIFICATIONS

I, Roger K. Brooks, Chairman, President and Chief Executive Officer of AmerUs
Group Co., certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of AmerUs Group Co;                                                                                                                                                                                                                                                        
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                         |  |                                                                                  | 
|------------------------ |  | -------------------------------------------------------------------------------- | 
|Dated: November 13, 2002 | 
|                         |  |                                                                                  | 
|By                       |  | /s/ Roger K. Brooks                                                              | 
|                         |  |                                                                                  | 
|                         |  | Roger K. Brooks
Chairman, President and
Chief Executive Officer
AmerUs Group Co. | 

43



---



##### Table of Contents



I, Melinda S. Urion, Chief Financial Officer of AmerUs Group Co., certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of AmerUs Group Co;                                                                                                                                                                                                                                                        
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                         |  |                                                           | 
|------------------------ |  | --------------------------------------------------------- | 
|Dated: November 13, 2002 | 
|                         |  |                                                           | 
|By                       |  | /s/ Melinda S. Urion                                      | 
|                         |  |                                                           | 
|                         |  | Melinda S. Urion
Chief Financial Officer
AmerUs Group Co. | 

44



---



##### Table of Contents



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.                                                                                                                  

45



---



##### Table of Contents



|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|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.                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|3.2     |  | Amended and Restated Bylaws of the Registrant, filed as Exhibit 3.2 on
Form 10-K, dated March 15, 2002, 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     |  | Call Option Agreement, dated as of July 27, 1998, between Goldman, Sachs & Co. and First Union National Bank relating to AmerUs Life Holdings,
Inc.s 7.0% ACES Units, filed as Exhibit 4.10 on Form 10-Q, dated August 13, 1998, is hereby incorporated by reference.                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.10    |  | Pledge Agreement, dated as of July 27, 1998, among AmerUs Life Holdings, Inc., Goldman, Sachs & Co. and First Union National Bank relating to
AmerUs Life Holdings, Inc.s 7.0% ACES Units, filed as Exhibit 4.11 on Form 10-Q, dated August 13, 1998, is hereby incorporated by reference.                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.11    |  | 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.                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.12    |  | 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.                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.13    |  | 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,                                                                                                                                                       

46



---



##### Table of Contents



|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |  | filed as Exhibit 4.14 on Form 10-Q dated November 14, 2000, is hereby incorporated by reference.                                                                                                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.14    |  | 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.                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.15    |  | 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.                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.16    |  | 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.            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.17    |  | 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.                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.18    |  | 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.                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.19    |  | 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.                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.20    |  | First Supplement to Purchase Contracts between American Mutual Holding Company and Holders, as specified, dated September 20, 2000, filed as
Exhibit 4.21on Form 10-Q, dated November 14, 2000, is hereby incorporated by reference.                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.21    |  | First Supplement to the Pledge Agreement dated July 27, 1998, relating to AmerUs Life Holdings, Inc.s 7.0% ACES units, among American Mutual Holding Company, Goldman Sachs & Co., as Call Option Holder, the Chase
Manhattan Bank, as Collateral Agent and First Union National Bank, as Unit Agent, dated September 20, 2000, filed as Exhibit 4.22 on Form 10-Q, dated
November 14, 2000, is hereby incorporated by reference.
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.22    |  | 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.                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.23    |  | 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.                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.24    |  | 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.                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.1*   |  | Supplemental Benefit Agreement among AmerUs Group
Co. and Melinda S. Urion dated March 4, 2002.                                                                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|11*     |  | Statement Re: Computation of Earnings Per Share.                                                                                                                                                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|12*     |  | Computation of Ratios of Earnings to Fixed Charges.                                                                                                                                                                                                                                                                                                                                                                               



---

|* |  | Included herein
|- |  | ---------------

47