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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
 FORM 10-Q   (Mark One) þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2005 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number 001-15166 AMERUS GROUP CO.  IOWA
    
    42-1458424(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    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 þ No o Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of
the Exchange Act). Yes þ No o The number of shares
outstanding of each of the Registrants classes of common stock
on May 2, 2005 was as follows: Common
Stock           
39,172,030 shares Exhibit index  Page 39
Page 1 of 41




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INDEX Page No.PART I  FINANCIAL INFORMATION
    
    
    4Item 1.Financial Statements
    
    
    4Consolidated Balance Sheets March 31, 2005 (Unaudited) and December 31, 2004
    
    
    4Consolidated Statements of Income (Unaudited) For the Three Months Ended March 31, 2005 and 2004
    
    
    6Consolidated Statements of Comprehensive Income (Unaudited) For the Three Months Ended March 31, 2005 and 2004
    
    
    7Consolidated Statements of Stockholders Equity For the Three Months Ended March 31, 2005 (Unaudited) and the Year Ended December 31, 2004
    
    
    8Consolidated Statements of Cash Flows (Unaudited) For the Three Months Ended March 31, 2005 and 2004
    
    
    9Notes to Consolidated Financial Statements (Unaudited)
    
    
    11Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 3.Quantitative and Qualitative Disclosures About Market Risk
    
    
    34Item 4.Controls and Procedures
    
    
    36PART II  OTHER INFORMATION
    
    
    36Item 1.Legal Proceedings
    
    
    36Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    37Item 6.Exhibits
    
    
    37Signatures
    
    
    38Index to Exhibits
    
    
    39Amended and Restated Articles of IncorporationComputation of Ratios of Earnings to Fixed ChargesCertification of Chief Executive OfficerCertification of Chief Financial OfficerCertification of Chief Executive OfficerCertification of Chief Financial Officer
  2




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SAFE HARBOR STATEMENT This Quarterly Report on Form 10-Q, including the Managements Discussion and Analysis of
Financial Condition and Results of Operations, contains statements which constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995, including
statements relating to trends in operations and financial results and the business and the products
of the Registrant and its subsidiaries, which include words such as anticipate, believe,
plan, estimate, expect, intend, and other similar expressions. Forward-looking statements
are made based upon managements current expectations and beliefs concerning future developments
and their potential effects on the Company. Such forward-looking statements are not guarantees of
future performance. Factors that may cause our actual results to differ materially from those
contemplated by these forward-looking statements include, among others, the following
possibilities: (a) general economic conditions and other factors, including prevailing interest
rate levels and stock and bond market performance, which may affect our ability to sell our
products, the market value of our investments and the lapse rate and profitability of policies; (b)
our ability to achieve anticipated levels of operational efficiencies and cost-saving initiatives
and to meet cash requirements based upon projected liquidity sources; (c) customer response to new
products, distribution channels and marketing initiatives; (d) mortality, morbidity, and other
factors which may affect the profitability of our insurance products; (e) our ability to develop
and maintain effective risk management policies and procedures and to maintain adequate reserves
for future policy benefits and claims; (f) changes in the federal income tax and other federal
laws, regulations, and interpretations, including federal regulatory measures that may
significantly affect the insurance business including limitations on antitrust immunity, minimum
solvency requirements, and changes to the tax advantages offered by life insurance and annuity
products or programs with which they are used; (g) increasing competition in the sale of insurance
and annuities and the recruitment of sales representatives; (h) regulatory changes,
interpretations, initiatives or pronouncements, including those relating to the regulation of
insurance companies and the regulation and sale of their products and the programs in which they
are used; (i) our ratings and those of our subsidiaries by independent rating organizations which
we believe are particularly important to the sale of our products; (j) the performance of our
investment portfolios; (k) the impact of changes in standards of accounting; (l) our ability to
integrate the business and operations of acquired entities; (m) expected protection products and
accumulation products margins; (n) the impact of anticipated investment transactions; and (o)
litigation or regulatory investigations or examinations. There can be no assurance that other factors not currently anticipated by us will not
materially and adversely affect our results of operations. You are cautioned not to place undue
reliance on any forward-looking statements made by us or on our behalf. Forward-looking statements
speak only as of the date the statement was made. We undertake no obligation to update or revise
any forward-looking statement. 3




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PART I  FINANCIAL INFORMATION 
 Item 1. Financial Statements AMERUS GROUP CO. 
   March 31,
    
    
    December 31,2005
    
    
    2004(unaudited)AssetsInvestments:Securities available-for-sale at fair value:Fixed maturity securities
    
    $
    15,740,652
    
    
    $
    15,646,653Equity securities
    
    
    76,438
    
    
    
    77,024Short-term investments
    
    
    2,927
    
    
    
    2,979Securities held for trading purposes at fair value:Fixed maturity securities
    
    
    1,602,262
    
    
    
    1,718,125Equity securities
    
    
    534
    
    
    
    15,468Mortgage loans
    
    
    874,650
    
    
    
    865,733Policy loans
    
    
    487,915
    
    
    
    486,071Other investments
    
    
    367,231
    
    
    
    374,240Total investments
    
    
    19,152,609
    
    
    
    19,186,293Cash and cash equivalents
    
    
    572,185
    
    
    
    478,441Accrued investment income
    
    
    227,182
    
    
    
    222,294Premiums, fees and other receivables
    
    
    38,363
    
    
    
    39,688Income taxes receivable
    
    
    3,473
    
    
    
    Reinsurance receivables
    
    
    680,488
    
    
    
    666,493Deferred policy acquisition costs
    
    
    1,446,716
    
    
    
    1,248,009Deferred sales inducements
    
    
    168,630
    
    
    
    137,538Value of business acquired
    
    
    369,232
    
    
    
    374,792Goodwill
    
    
    228,869
    
    
    
    226,291Property and equipment
    
    
    45,777
    
    
    
    46,114Other assets
    
    
    302,819
    
    
    
    296,409Separate account assets
    
    
    233,533
    
    
    
    248,507Total assets
    
    $
    23,469,876
    
    
    $
    23,170,869
 See accompanying notes to consolidated financial statements. 4




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AMERUS GROUP CO.   March 31,
    
    
    December 31,2005
    
    
    2004(unaudited)Liabilities and Stockholders EquityLiabilities:Policy reserves and policyowner funds:Future life and annuity policy benefits
    
    $
    18,239,450
    
    
    $
    17,923,329Policyowner funds
    
    
    1,443,814
    
    
    
    1,419,76219,683,264
    
    
    
    19,343,091Accrued expenses and other liabilities
    
    
    965,390
    
    
    
    837,514Dividends payable to policyowners
    
    
    287,415
    
    
    
    322,037Policy and contract claims
    
    
    69,149
    
    
    
    70,465Income taxes payable
    
    
    
    
    
    
    9,299Deferred income taxes
    
    
    68,666
    
    
    
    145,332Notes payable
    
    
    571,385
    
    
    
    571,155Separate account liabilities
    
    
    233,533
    
    
    
    248,507Total liabilities
    
    
    21,878,802
    
    
    
    21,547,400Stockholders equity:Preferred Stock, no par value, 20,000,000 shares
authorized, none issued
    
    
    
    
    
    
    Common Stock, no par value, 230,000,000 shares
authorized; 44,529,858 shares issued and
39,162,518 shares outstanding in 2005;
44,225,902 shares issued and 39,400,663 shares
outstanding in 2004
    
    
    44,530
    
    
    
    44,226Additional paid-in capital
    
    
    1,204,360
    
    
    
    1,198,379Accumulated other comprehensive income
    
    
    34,546
    
    
    
    114,670Unearned compensation
    
    
    (2,700
    )
    
    
    (1,238
    )Retained earnings
    
    
    493,399
    
    
    
    431,911Treasury stock, at cost (5,367,340 shares in 2005
and 4,825,239 shares in 2004)
    
    
    (183,061
    )
    
    
    (164,479
    )Total stockholders equity
    
    
    1,591,074
    
    
    
    1,623,469Total liabilities and stockholders equity
    
    $
    23,469,876
    
    
    $
    23,170,869
 See accompanying notes to consolidated financial statements. 5




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AMERUS GROUP CO. 
   For The Three Months Ended March 31,2005
    
    
    2004(unaudited)Revenues:Insurance premiums
    
    $
    62,546
    
    
    $
    70,737Product charges
    
    
    59,033
    
    
    
    49,562Net investment income
    
    
    268,711
    
    
    
    256,875Realized/unrealized capital losses
    
    
    (48,944
    )
    
    
    (85
    )Other income
    
    
    12,556
    
    
    
    11,702353,902
    
    
    
    388,791Benefits and expenses:Policyowner benefits
    
    
    169,583
    
    
    
    238,429Underwriting, acquisition and other expenses
    
    
    40,608
    
    
    
    32,700Amortization of deferred policy acquisition costs
and value of business acquired
    
    
    52,743
    
    
    
    47,911Dividends to policyowners
    
    
    20,003
    
    
    
    25,484282,937
    
    
    
    344,524Income from continuing operations
    
    
    70,965
    
    
    
    44,267Interest expense
    
    
    7,780
    
    
    
    8,398Income before income tax expense
    
    
    63,185
    
    
    
    35,869Income tax expense
    
    
    1,697
    
    
    
    6,129Net income from continuing operations
    
    
    61,488
    
    
    
    29,740Income from discontinued operations, net of tax
    
    
    
    
    
    
    3,899Net income before cumulative effect of change in accounting
    
    
    61,488
    
    
    
    33,639Cumulative effect of change in accounting, net of tax
    
    
    
    
    
    
    (510
    )Net income
    
    $
    61,488
    
    
    $
    33,129Net income from continuing operations per common share:Basic
    
    $
    1.55
    
    
    $
    0.76Diluted
    
    $
    1.43
    
    
    $
    0.74Net income per common share:Basic
    
    $
    1.55
    
    
    $
    0.84Diluted
    
    $
    1.43
    
    
    $
    0.82Weighted average common shares outstanding:Basic
    
    
    39,575,696
    
    
    
    39,263,367Diluted
    
    
    42,930,905
    
    
    
    40,434,902
 See accompanying notes to consolidated financial statements. 6




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AMERUS GROUP CO. 
   For The Three Months Ended March 31,2005
    
    
    2004(unaudited)Net income
    
    $
    61,488
    
    
    $
    33,129Other comprehensive income (loss), before tax:Unrealized gains (losses) on securities:Unrealized holding gains (losses) arising during period
    
    
    (123,642
    )
    
    
    88,879Reclassification adjustment for (gains) losses
included in net income
    
    
    374
    
    
    
    17,453Other comprehensive income (loss), before tax
    
    
    (123,268
    )
    
    
    106,332Income tax (expense) benefit related to items of other
comprehensive income
    
    
    43,144
    
    
    
    (37,216
    )Other comprehensive income (loss), net of taxes
    
    
    (80,124
    )
    
    
    69,116Comprehensive income (loss)
    
    $
    (18,636
    )
    
    $
    102,245
 See accompanying notes to consolidated financial statements. 7




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AMERUS GROUP CO. 
    AccumulatedAdditional
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TotalPaid-In
    
    
    Comprehensive
    
    
    Unearned
    
    
    Retained
    
    
    Treasury
    
    
    StockholdersCommon Stock
    
    
    Capital
    
    
    Income
    
    
    Compensation
    
    
    Earnings
    
    
    Stock
    
    
    EquityBalance at December 31, 2003
    
    $
    43,836
    
    
    $
    1,184,237
    
    
    $
    84,519
    
    
    $
    (1,361
    )
    
    $
    255,006
    
    
    $
    (156,426
    )
    
    $
    1,409,8112004:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    192,642
    
    
    
    
    
    
    
    192,642Net unrealized gain on securities
    
    
    
    
    
    
    
    
    
    
    33,959
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,959Net unrealized gain on derivatives
designated as cash flow hedges
    
    
    
    
    
    
    
    
    
    
    420
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    420Stock issued under various incentive
plans, net of forfeitures
    
    
    390
    
    
    
    14,142
    
    
    
    
    
    
    
    123
    
    
    
    
    
    
    
    1,100
    
    
    
    15,755Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,153
    )
    
    
    (9,153
    )Dividends declared on common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,737
    )
    
    
    
    
    
    
    (15,737
    )Minimum pension liability adjustment
    
    
    
    
    
    
    
    
    
    
    (4,228
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,228
    )Balance at December 31, 2004
    
    
    44,226
    
    
    
    1,198,379
    
    
    
    114,670
    
    
    
    (1,238
    )
    
    
    431,911
    
    
    
    (164,479
    )
    
    
    1,623,4692005 (unaudited):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,488
    
    
    
    
    
    
    
    61,488Net unrealized loss on securities
    
    
    
    
    
    
    
    
    
    
    (80,018
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80,018
    )Net unrealized loss on derivatives
designated as cash flow hedges
    
    
    
    
    
    
    
    
    
    
    (106
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (106
    )Stock issued under various incentive
plans, net of forfeitures
    
    
    304
    
    
    
    5,981
    
    
    
    
    
    
    
    (1,462
    )
    
    
    
    
    
    
    996
    
    
    
    5,819Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,578
    )
    
    
    (19,578
    )Balance at March 31, 2005
    
    $
    44,530
    
    
    $
    1,204,360
    
    
    
    34,546
    
    
    $
    (2,700
    )
    
    $
    493,399
    
    
    $
    (183,061
    )
    
    $
    1,591,074
 See accompanying notes to consolidated financial statements. 8




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AMERUS GROUP CO. 
   For The Three Months Ended March 31,2005
    
    
    2004(unaudited)Cash flows from operating activitiesNet income
    
    $
    61,488
    
    
    $
    33,129Adjustments to reconcile net income to net cash
provided by operating activities:Cumulative effect of change in accounting
    
    
    
    
    
    
    510Gain on sale of discontinued operations
    
    
    
    
    
    
    (3,899
    )Product charges
    
    
    (59,033
    )
    
    
    (49,562
    )Interest credited to policyowner account
balances
    
    
    128,781
    
    
    
    120,594Change in option value of indexed products
and market value adjustments on total
return strategy annuities
    
    
    (44,334
    )
    
    
    23,733Realized/unrealized capital (gains) losses
    
    
    48,944
    
    
    
    85DAC and VOBA amortization
    
    
    52,743
    
    
    
    47,911DAC and VOBA capitalized
    
    
    (114,527
    )
    
    
    (88,790
    )Change in:Accrued investment income
    
    
    (4,888
    )
    
    
    (9,566
    )Reinsurance receivables
    
    
    (35,861
    )
    
    
    (18,370
    )Securities held for trading purposes:Fixed maturities
    
    
    74,126
    
    
    
    82,999Equity securities
    
    
    14,913
    
    
    
    (4,029
    )Liabilities for future policy benefits
    
    
    (44,876
    )
    
    
    (32,635
    )Accrued expenses and other liabilities
    
    
    108,299
    
    
    
    161,338Policy and contract claims and other
policyowner funds
    
    
    21,492
    
    
    
    48,237Income taxes:Current
    
    
    (12,771
    )
    
    
    24,953Deferred
    
    
    (32,304
    )
    
    
    (17,710
    )Other, net
    
    
    12,632
    
    
    
    (18,003
    )Net cash provided by operating activities
    
    
    174,824
    
    
    
    300,925Cash flows from investing activities:Purchase of fixed maturities available-for-sale
    
    
    (1,225,650
    )
    
    
    (1,491,077
    )Proceeds from sale of fixed maturities available-for-sale
    
    
    503,684
    
    
    
    892,538Maturities, calls and principal reductions of
fixed maturities available-for-sale
    
    
    322,205
    
    
    
    293,607Purchase of equity securities
    
    
    (681
    )
    
    
    (37,116
    )Proceeds from sale of equity securities
    
    
    880
    
    
    
    35,962Change in short-term investments, net
    
    
    982
    
    
    
    10,503Purchase of mortgage loans
    
    
    (42,365
    )
    
    
    (24,268
    )
 9




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AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS  (Continued)
($ in thousands) For The Three Months Ended March 31,2005
    
    
    2004(unaudited)Proceeds from repayment and sale of mortgage loans
    
    
    33,187
    
    
    
    148,101Purchase of other invested assets
    
    
    (25,868
    )
    
    
    (80,971
    )Proceeds from sale of other invested assets
    
    
    19,385
    
    
    
    31,942Change in policy loans, net
    
    
    (1,844
    )
    
    
    4,402Proceeds from sale of discontinued operations
    
    
    
    
    
    
    15,000Other assets, net
    
    
    (6,075
    )
    
    
    3,793Net cash used in investing activities
    
    
    (422,160
    )
    
    
    (197,584
    )Cash flows from financing activities:Deposits to policyowner account balances
    
    
    744,034
    
    
    
    508,716Withdrawals from policyowner account balances
    
    
    (409,003
    )
    
    
    (429,342
    )Change in debt, net
    
    
    230
    
    
    
    (50,500
    )Stock issued under various incentive plans, net of
forfeitures
    
    
    5,819
    
    
    
    3,164Net cash provided by financing activities
    
    
    341,080
    
    
    
    32,038Net increase in cash
    
    
    93,744
    
    
    
    135,379Cash and cash equivalents at beginning of period
    
    
    478,441
    
    
    
    274,150Cash and cash equivalents at end of period
    
    $
    572,185
    
    
    $
    409,529Supplemental disclosure of cash activities:Interest paid
    
    $
    8,738
    
    
    $
    7,818Income taxes paid
    
    $
    43,044
    
    
    $
    78Supplemental disclosure of non-cash operating activities:Capitalization of deferred sales inducements
    
    $
    22,418
    
    
    $
    11,362Supplemental disclosure of non-cash financing activities:Accrual of treasury stock purchases
    
    $
    19,578
    
    
    $
    
 See accompanying notes to consolidated financial statements. 10




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AMERUS GROUP CO. 
   (1) CONSOLIDATION AND BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States (GAAP) for interim financial
information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by GAAP for annual financial
statements. In the opinion of management, all adjustments considered necessary for a fair
presentation have been included. All adjustments were of a normal recurring nature, unless
otherwise noted in the Notes to Consolidated Financial Statements. Operating results for the three
months ended March 31, 2005 are not necessarily indicative of the results that may be expected for
the year ending December 31, 2005. The consolidated balance sheet at December 31, 2004 has been
derived from the audited financial statements at that date but does not include all of the
information and footnotes required by GAAP for complete financial statements. For further
information and for capitalized terms not defined in this Form 10-Q, refer to the consolidated
financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the
year ended December 31, 2004. 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. and its subsidiaries (collectively, AAG), AmerUs Capital Management Group, Inc.
(ACM), and ILICO Holdings, Inc., the holding company of Indianapolis Life Insurance Company (ILIC)
and its subsidiaries (collectively, ILICO). All significant intercompany transactions and balances
have been eliminated in consolidation. The Company has certain stock-based employee compensation plans which are accounted for under
the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations. The plans are stock option plans for which no stock-based
employee compensation cost is reflected in net income, as all options granted under those plans had
an exercise price equal to the market value of the underlying common stock on the date of grant.
The following table illustrates the effect on net income and earnings per share if the Company had
applied the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS)
123, Accounting for Stock-Based Compensation, to stock-based employee compensation: 11




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For The Three Months Ended March 31,2005
    
    
    2004($ in thousands, except share data)Net income, as reported
    
    $
    61,488
    
    
    $
    33,129Deduct: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects
    
    
    (659
    )
    
    
    (1,162
    )Pro forma net income
    
    $
    60,829
    
    
    $
    31,967Earnings per share:Basic  as reported
    
    $
    1.55
    
    
    $
    0.84Basic  pro forma
    
    $
    1.54
    
    
    $
    0.81Diluted  as reported
    
    $
    1.43
    
    
    $
    0.82Diluted  pro forma
    
    $
    1.42
    
    
    $
    0.79
 Certain amounts in the 2004 financial statements have been reclassified to conform to the
2005 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, PRIDESSM and the
Companys Optionally Convertible Equity-Linked Accreting Notes (OCEANSSM) and is
calculated using the treasury stock method. Diluted earnings per share applicable to the Companys PRIDESSM securities are
determined using the treasury stock method as it is currently anticipated that holders of the
PRIDES are more likely to tender cash in the future for the securities forward contract. The
PRIDES added 1,502,762 and 523,539 shares to the diluted earnings per share calculation for the
three months ended March 31, 2005 and 2004, respectively. Diluted earnings per share applicable to the Companys OCEANsSM are determined
using the guidance of the Financial Accounting Standards Boards Emerging Issues Task Force Issue
04-8 (EITF 04-8), The Effect of Contingently Convertible Debt on Diluted Earnings per Share,
which was effective for periods ending after December 15, 2004. EITF 04-8 requires diluted
earnings per share to be computed following the guidance of EITF 90-19, Convertible Bonds with
Issuer Option to Settle for Cash upon Conversion, for securities such as the OCEANs which are
considered to be Instrument C securities. The conversion spread portion of an Instrument C
security should be included in diluted earnings per share based on the number of shares that would
be required to be delivered if the instrument had been converted at the end of the period. The
OCEANs added 990,066 shares for the diluted earnings per share calculation for the three months
ended March 31, 2005 and no shares for the three months ended March 31, 2004. 12




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##### Table of Contents



For The Three Months Ended March 31,2005

    
    
    2004Number of
    
    
    Per Share
    
    
      
    

    
    
  Number of

    
    
    Per ShareNet Income
    
    
    Shares
    
    
    Amount
    
    
    Net Income
    
    
    Shares
    
    
    Amount($ in thousands, except share data)Basic EPSNet Income from Continuing Operations
    
    $
    61,488
    
    
    
    39,576
    
    
    $
    1.55
    
    
    $
    29,740
    
    
    
    39,263
    
    
    $
    0.76Effect of dilutive securitiesOptions and other stock based
compensation
    
    
    
    
    
    
    862
    
    
    
    (0.04
    )
    
    
    
    
    
    
    648
    
    
    
    (0.01
    )PRIDES
    
    
    
    
    
    
    1,503
    
    
    
    (0.05
    )
    
    
    
    
    
    
    524
    
    
    
    (0.01
    )OCEANs
    
    
    
    
    
    
    990
    
    
    
    (0.03
    )
    
    
    
    
    
    
    
    
    
    
    Diluted EPS
    
    $
    61,488
    
    
    
    42,931
    
    
    $
    1.43
    
    
    $
    29,740
    
    
    
    40,435
    
    
    $
    0.74
 (3) CLOSED BLOCK The Company has established two closed blocks, which we refer to collectively as the Closed
Block. The first was established on June 30, 1996 in connection with the reorganization of ALIC
from a mutual company to a stock company. The second was established as of March 31, 2000 in
connection with the reorganization of ILIC from a mutual company to a stock company. Insurance
policies which had a dividend scale in effect as of each Closed Block establishment date were
included in the Closed Block. The Closed Block was designed to provide reasonable assurance to
owners of insurance policies included therein that, after the reorganization of ALIC and ILIC,
assets would be available to maintain the dividend scales and interest credits in effect prior to
the reorganization if the experience underlying such scales and credits continues. Summarized financial information of the Closed Block as of March 31, 2005 and December 31,
2004 and for the three months ended March 31, 2005 and 2004 are as follows: 13




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##### Table of Contents



March 31,
    
    
    December 31,2005
    
    
    2004($ in thousands)Liabilities:Future life and annuity policy benefits
    
    $
    2,791,668
    
    
    $
    2,804,222Policyowner funds
    
    
    8,039
    
    
    
    8,096Accrued expenses and other liabilities
    
    
    8,099
    
    
    
    32,140Dividends payable to policyowners
    
    
    158,750
    
    
    
    161,475Policy and contract claims
    
    
    12,704
    
    
    
    14,705Policyowner dividend obligation
    
    
    121,179
    
    
    
    152,975Total Liabilities
    
    
    3,100,439
    
    
    
    3,173,613Assets:Fixed maturity securities available-for-sale at fair value
    
    
    1,963,797
    
    
    
    2,028,790Mortgage loans
    
    
    67,720
    
    
    
    70,686Policy loans
    
    
    333,961
    
    
    
    335,573Other investments
    
    
    
    
    
    
    34Cash and cash equivalents
    
    
    34,476
    
    
    
    8,473Accrued investment income
    
    
    31,910
    
    
    
    32,637Premiums and fees receivable
    
    
    40,894
    
    
    
    59,369Other assets
    
    
    
    
    
    
    17Total Assets
    
    
    2,472,758
    
    
    
    2,535,579Maximum future earnings to be recognized from assets and
liabilities of the Closed Block
    
    $
    627,681
    
    
    $
    638,034
 14




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##### Table of Contents



For The Three Months Ended March 31,2005
    
    
    2004($ in thousands)Operations:Insurance premiums
    
    $
    41,887
    
    
    $
    52,596Product charges
    
    
    1,701
    
    
    
    90Net investment income
    
    
    34,419
    
    
    
    35,734Realized gains on investments
    
    
    130
    
    
    
    830Policyowner benefits
    
    
    (50,121
    )
    
    
    (55,170
    )Underwriting, acquisition and other expenses
    
    
    (557
    )
    
    
    (1,089
    )Dividends to policyowners
    
    
    (18,168
    )
    
    
    (23,399
    )Contribution from the Closed Block before income taxes
    
    $
    9,291
    
    
    $
    9,592
 (4) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company accounts for derivatives, including certain derivative instruments embedded in
other contracts, 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 addition, we also have trading securities that back our total return strategy
traditional annuity products. During the first three months of 2005 and 2004, realized/unrealized
gains (losses) on investments included an unrealized loss of $27.6 million and an unrealized gain
of $6.2 million, respectively, from the change in fair value on call options used as a natural
hedge of embedded options within indexed products. Additionally, an unrealized loss has been
recognized amounting to $21.7 million and an unrealized gain of $17.7 million for the first three
months of 2005 and 2004, respectively, from the change in fair value on the trading securities
backing the total return strategy products. Policyowner benefits included an offsetting adjustment
to contract liabilities for fair value changes in options embedded within the indexed products and
fair value changes on total return strategy annuity contracts. The
total adjustment to policyowner benefits amounted to a decrease in expense of
$44.3 million and an additional expense of $23.7 million the first three months of 2005 and 2004,
respectively. The following table summarizes the income (loss) impact of the market value adjustments on
trading securities, derivatives and the cash flow hedge amortization for the three months ended
March 31, 2005 and 2004: 15




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##### Table of Contents



Three Months Ended March 31, 2005Total Return
    
    
    IndexedProducts
    
    
    Products
    
    
    Other
    
    
    Total($ in thousands)Fixed maturity securities held for trading
    
    $
    (18,374
    )
    
    $
    
    
    
    $
    (3,294
    )
    
    $
    (21,668
    )Options
    
    
    
    
    
    
    (26,895
    )
    
    
    (688
    )
    
    
    (27,583
    )Market value adjustment to liabilities
    
    
    9,392
    
    
    
    32,478
    
    
    
    2,464
    
    
    
    44,334Cash flow hedge amortization
    
    
    
    
    
    
    
    
    
    
    39
    
    
    
    39DAC amortization impact of
net adjustments above
    
    
    1,237
    
    
    
    (4,361
    )
    
    
    
    
    
    
    (3,124
    )Pre-tax total
    
    
    (7,745
    )
    
    
    1,222
    
    
    
    (1,479
    )
    
    
    (8,002
    )Income taxes
    
    
    2,711
    
    
    
    (428
    )
    
    
    518
    
    
    
    2,801After-tax total
    
    $
    (5,034
    )
    
    $
    794
    
    
    $
    (961
    )
    
    $
    (5,201
    )
 Three Months Ended March 31, 2004Total Return
    
    
    IndexedProducts
    
    
    Products
    
    
    Other
    
    
    Total($ in thousands)Fixed maturity securities held for trading
    
    $
    14,606
    
    
    $
    
    
    
    $
    3,046
    
    
    $
    17,652Options
    
    
    
    
    
    
    7,148
    
    
    
    (985
    )
    
    
    6,163Market value adjustment to liabilities
    
    
    (12,772
    )
    
    
    (9,166
    )
    
    
    (1,795
    )
    
    
    (23,733
    )Cash flow hedge amortization
    
    
    
    
    
    
    
    
    
    
    (462
    )
    
    
    (462
    )DAC amortization impact of
net adjustments above
    
    
    694
    
    
    
    1,635
    
    
    
    331
    
    
    
    2,660Pre-tax total
    
    
    2,528
    
    
    
    (383
    )
    
    
    135
    
    
    
    2,280Income taxes
    
    
    (885
    )
    
    
    134
    
    
    
    (47
    )
    
    
    (798
    )After-tax total
    
    $
    1,643
    
    
    $
    (249
    )
    
    $
    88
    
    
    $
    1,482
 (5) FEDERAL INCOME TAXES The effective income tax rate for the three months ended March 31, 2005 and 2004 varied from
the prevailing corporate rate primarily as a result of tax exempt interest and dividends received
deduction. The effective tax rate was also reduced by a reduction in the income tax accrual. The
accrual reduction, amounting to $19.9 million and $5.2 million, for the three months ended March
31, 2005 and 2004, respectively, was for the release of provisions originally established for
potential tax adjustments which have been settled or eliminated. The effective income tax rate
excluding the accrual reductions was 34.23% and 31.54% for the three months ended March 31, 2005
and 2004, respectively. (6) COMMITMENTS AND CONTINGENCIES In recent years, the life insurance industry, including the Company and its subsidiaries, has
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
routinely involved in litigation and other proceedings, including class actions, reinsurance claims
and regulatory proceedings arising in the ordinary course of its business. Some of these claims
and legal actions are in jurisdictions where juries are given substantial latitude in assessing
damages, including punitive and exemplary damages. In addition, regulatory bodies, such as state
insurance departments and attorneys 16




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##### Table of Contents



general, periodically make inquiries and conduct examinations
concerning the Companys compliance
with insurance and other laws. The Company responds to such inquiries and cooperates with
regulatory examinations in the ordinary course of business. On
April 7, 2005, a national class action complaint was filed in the U.S. District Court for
the Central District of California against the Company and certain of its subsidiaries alleging
conduct and causes of action, and seeking relief, similar to that alleged in class action lawsuits
in California state courts described in the Companys 2004 Annual Report on Form 10-K. On April
25, 2005 a similar national class action complaint was filed in the U.S. District Court for the
District of Kansas against a subsidiary of the Company. These class
actions were brought on behalf of purchasers of annuity products
claiming that the products and manner in which they were sold were
inappropriate for the senior citizen market. The Company continues to
believe it has appropriate defenses against these lawsuits and intends to vigorously defend its
position. The Companys pending litigation (including without limitation the proceedings described in
the immediately preceding paragraph) is subject to many uncertainties, and given its complexity and
scope, the outcomes cannot be predicted. Given these uncertainties, the Company is unable to
estimate the possible loss or range of loss that may result from the Companys pending litigation.
It is possible that the Companys results of operations or cash flow in a particular quarterly or
annual period could be materially affected by an ultimate unfavorable resolution of pending
litigation and regulatory matters depending, in part, upon the results of operations or cash flow
for such period. 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 the Companys
pending claims and legal actions, would have no material effect on its operations and financial
position. (7) EMPLOYEE BENEFIT PLANS The Company has a frozen defined benefit pension plan and also has defined benefit plans which
provide supplemental retirement benefits to certain agents and executives. In addition to pension
benefits, the Company also provides certain health care and life insurance benefits for retired
employees. The following is a summary of net periodic benefit cost for these plans for the three
months ended March 31, 2005 and 2004: Three Months Ended March 31,2005
    
    
    2004($ in thousands)Components of net periodic benefit cost:Service cost
    
    $
    79
    
    
    $
    82Interest cost
    
    
    1,472
    
    
    
    1,550Expected return on plan assets
    
    
    (1,216
    )
    
    
    (1,214
    )Amortization of prior service cost
    
    
    22
    
    
    
    22Amortizaton of actuarial loss
    
    
    178
    
    
    
    62Net periodic benefit cost
    
    
    535
    
    
    
    502Curtailment
    
    
    
    
    
    
    (951
    )Total expense
    
    $
    535
    
    
    $
    (449
    )
 17




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##### Table of Contents



(8) ACCOUNTING DEVELOPMENTS In December 2004, the FASB issued a revision to SFAS 123, Share-Based Payment, (SFAS 123R)
which is a revision of SFAS 123, Accounting for Stock-Based Compensation, (SFAS 123). SFAS 123R
requires all share-based payments to employees, including grants of employee stock options, to be
recognized in the income statement based on fair values. Pro forma disclosure of fair value
information is no longer an alternative. The implementation date of the statement has been delayed
to be effective for the fiscal year beginning after June 15, 2005. Adoption is to be made using
either the modified prospective method or the modified retrospective method. The modified
prospective method recognizes cost based on the requirements for all share-based payments granted
after the effective date and for awards granted prior to the effective date that remain unvested
prior to the effective date. The modified retrospective method includes the requirements of the
modified prospective method but also permits restatement of financial statements based on pro forma
amounts previously recognized under SFAS 123. Restatement can either be for all prior periods
presented or prior interim periods of the year of adoption. Early adoption is permitted. The
Company continues to evaluate the impacts of SFAS 123R which the Company will adopt January 1,
2006. The Company currently discloses the pro forma impacts of recognizing fair value as permitted
by SFAS 123 in note 1 to the consolidated financial statements. (9) OPERATING SEGMENTS The Company has two operating segments: Protection Products and Accumulation Products.
Products generally distinguish a segment. A brief description of each segment follows: Protection Products. The primary product offerings consist of interest-sensitive whole life,
term life, universal life and indexed life insurance policies. Indexed life is a type of universal
life or interest-sensitive whole life product. These products are marketed on a national basis
primarily through a Career Marketing Organization (CMOs) system, a Personal Producing General Agent
(PPGA) system, Independent Marketing Organizations (IMOs) and a New York distribution system. Accumulation Products. The primary product offerings consist of individual fixed annuities
(comprised of traditional fixed annuities and indexed annuities), marketed on a national basis
primarily through IMOs and independent brokers, and insurance contracts issued through funding
agreements. The product offerings within each segment are of a very similar nature. Insurance premiums of
the protection products segment primarily include term life products. Product charges of the
protection products segment include interest-sensitive whole life, universal life and indexed life
insurance products. Product charges of the accumulation products segment include traditional fixed
and indexed annuities. Due to the similarity of products within each segment, premiums and product
charges are shown by segment and not by specific product type. 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 segment pre-tax operating
income and net income on the following operating segment tables and are as follows:  1)
    Realized/unrealized gains and losses on open block assets.2)
    Market value changes and amortization of assets and liabilities associated with
the accounting for derivatives, such as:  
    Unrealized gains and losses on open block options and securities held
for trading.
    Change in option value of indexed products and market value adjustments
on total return strategy annuities.
    Cash flow hedge amortization. 18




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##### Table of Contents



3)
    Amortization of deferred policy acquisition costs (DAC) and value of business
acquired (VOBA) related to the unrealized and realized gains and losses on the open
block investments and the derivative adjustments.4)
    Other income from non-insurance operations.5)
    Interest expense.6)
    Income tax expense.7)
    Income from discontinued operations.8)
    Cumulative effect of changes in accounting. These items will fluctuate from period to period depending on the prevailing interest rate and
economic environment or are not part of the core insurance operations. As a result, management
believes they do not reflect the ongoing earnings capacity of the Companys operating segments. Premiums; product charges; policyowner benefits; insurance expenses; amortization of DAC,
deferred sales inducements and VOBA; and dividends to policyowners are attributed directly to each
operating segment. Net investment income and closed block realized capital gains and losses 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, operations of the Companys real estate management subsidiary, and
accident and health insurance. 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, deferred sales inducements, and VOBA as previously discussed, are not
significant. There have been no material changes in segment assets since December 31, 2004. 19




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##### Table of Contents



Operating Segment Income
($ in thousands) Three Months Ended March 31, 2005Protection
    
    
    Accumulation
    
    
    
    
    
    
    TotalProducts
    
    
    Products
    
    
    All Other
    
    
    ConsolidatedRevenues:Insurance premiums
    
    $
    61,483
    
    
    $
    480
    
    
    $
    583
    
    
    $
    62,546Product charges
    
    
    47,077
    
    
    
    11,956
    
    
    
    
    
    
    
    59,033Net investment income
    
    
    86,886
    
    
    
    181,646
    
    
    
    179
    
    
    
    268,711Realized/unrealized gains on closed block investments
    
    
    130
    
    
    
    
    
    
    
    
    
    
    
    130Other income
    
    
    861
    
    
    
    11,552
    
    
    
    520
    
    
    
    12,933196,437
    
    
    
    205,634
    
    
    
    1,282
    
    
    
    403,353Benefits and expenses:Policyowner benefits
    
    
    89,201
    
    
    
    124,728
    
    
    
    27
    
    
    
    213,956Underwriting, acquisition, and other expenses
    
    
    18,393
    
    
    
    15,191
    
    
    
    7,024
    
    
    
    40,608Amortization of DAC and VOBA, net of
open block gain adjustment of $2,825
    
    
    24,871
    
    
    
    25,047
    
    
    
    
    
    
    
    49,918Dividends to policyowners
    
    
    20,002
    
    
    
    1
    
    
    
    
    
    
    
    20,003152,467
    
    
    
    164,967
    
    
    
    7,051
    
    
    
    324,485Segment pre-tax operating income
    
    $
    43,970
    
    
    $
    40,667
    
    
    $
    (5,769
    )
    
    
    78,868Realized/unrealized gains on open block assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177Unrealized losses on open block options and
trading investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49,251
    )Change in option value of indexed
products and market value adjustments on
total return strategy annuities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,334Cash flow hedge amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39Amortization of DAC and VOBA due to open
block gains and losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,825
    )Other loss from non-insurance operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (377
    )Income from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70,965Interest (expense)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,780
    )Income tax (expense)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,697
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    61,488
 20




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##### Table of Contents



Operating Segment Income
($ in thousands) Three Months Ended March 31, 2004Protection
    
    
    Accumulation
    
    
    
    
    
    
    TotalProducts
    
    
    Products
    
    
    All Other
    
    
    ConsolidatedRevenues:Insurance premiums
    
    $
    69,716
    
    
    $
    723
    
    
    $
    298
    
    
    $
    70,737Product charges
    
    
    35,459
    
    
    
    14,103
    
    
    
    
    
    
    
    49,562Net investment income
    
    
    81,258
    
    
    
    174,263
    
    
    
    1,354
    
    
    
    256,875Realized/unrealized gains on closed
block investments
    
    
    830
    
    
    
    
    
    
    
    
    
    
    
    830Other income
    
    
    906
    
    
    
    9,487
    
    
    
    1,508
    
    
    
    11,901188,169
    
    
    
    198,576
    
    
    
    3,160
    
    
    
    389,905Benefits and expenses:Policyowner benefits
    
    
    93,395
    
    
    
    120,818
    
    
    
    21
    
    
    
    214,234Underwriting, acquisition, and other expenses
    
    
    16,958
    
    
    
    10,828
    
    
    
    4,914
    
    
    
    32,700Amortization of DAC and VOBA, net of
open block loss adjustment of ($1,260)
    
    
    19,241
    
    
    
    29,930
    
    
    
    
    
    
    
    49,171Dividends to policyowners
    
    
    25,484
    
    
    
    
    
    
    
    
    
    
    
    25,484155,078
    
    
    
    161,576
    
    
    
    4,935
    
    
    
    321,589Segment pre-tax operating income
    
    $
    33,091
    
    
    $
    37,000
    
    
    $
    (1,775
    )
    
    
    68,316Realized/unrealized losses on open block assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,730
    )Unrealized gains on open block options and
trading investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,815Change in option value of indexed
products and market value adjustments on
total return strategy annuities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,733
    )Cash flow hedge amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (462
    )Amortization of DAC and VOBA due to open
block gains and losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,260Other loss from non-insurance operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (199
    )Income from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,267Interest (expense)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,398
    )Income tax (expense)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,129
    )Income from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,899Cumulative effect of change in accounting, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (510
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    33,129
 21




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Item 2. Managements Discussion And Analysis Of Financial Condition And Results Of
Operations Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A)
addresses the consolidated financial condition of AmerUs Group Co. as of March 31, 2005, compared
with December 31, 2004, and our consolidated results of operations for the three months ended March
31, 2005 and 2004. You should read the following analysis of our consolidated financial condition
and results of operations in conjunction with our MD&A and audited consolidated financial
statements included in our Annual Report on Form 10-K for the year ended December 31, 2004, and
Unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report on Form
10-Q. 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 primary offerings of the protection products segment are interest-sensitive whole
life, term life, universal life and indexed life insurance policies. Indexed life is a type of
universal life or interest-sensitive whole life product. The primary offerings of the accumulation
products segment are individual fixed annuities (comprised of traditional fixed annuities and
indexed annuities) and funding agreements. FINANCIAL HIGHLIGHTS Our financial highlights are as follows: For The Three Months Ended March 31,2005
    
    
    2004($ in thousands, except share data)Segment pre-tax operating income:Protection Products
    
    $
    43,970
    
    
    $
    33,091Accumulation Products
    
    
    40,667
    
    
    
    37,000Other operations
    
    
    (5,769
    )
    
    
    (1,775
    )Total segment pre-tax operating income
    
    
    78,868
    
    
    
    68,316Non-segment expense, net (A)
    
    
    17,380
    
    
    
    35,187Net income
    
    $
    61,488
    
    
    $
    33,129Diluted net income per share
    
    $
    1.43
    
    
    $
    0.82
 March 31,
    
    
    December 31,2005
    
    
    2004Total assets
    
    $
    23,469,876
    
    
    $
    23,170,869Stockholders equity
    
    $
    1,591,074
    
    
    $
    1,623,469
   (A)
    
    Non-segment expense, net consists primarily of open block realized/unrealized gains and
losses, derivative related market value adjustments, non-insurance operations, interest
expense, income taxes, discontinued operations and cumulative effect of change in accounting. 22




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Operating segment income in the first quarter of 2005 increased for both the protection
products and accumulation products segments as compared to the same periods in 2004. Protection
products earnings were primarily impacted by increased open block product margins. Our
accumulation products pre-tax operating segment income increased primarily due to growth in assets
and increased product spread. The increases in protection products and accumulation products
segment income were partially offset by higher operating losses of the other segment in the first
quarter of 2005 compared to 2004. The 2004 other segment results were favorably impacted by gains
from an equipment transaction and an employee postretirement benefit plan curtailment. Net income increased in the first quarter of 2005 compared to the first quarter of 2004
primarily as a result of higher operating segment income and income tax accrual reductions. Total assets increased $299 million during the first quarter of 2005 primarily as a result of
net cash received from collected premiums and deposits, positive cash flows from operating
activities and the utilization of securities lending arrangements. Total investments grew $269
million which was more than offset by declines in unrealized investment gains of $303 million.
Liabilities increased primarily due to policy reserves and policyowner funds which increased due to
the higher volume of insurance in force and additional securities lending arrangements.
Stockholders equity decreased $32 million in the first quarter of 2005 primarily as a result of
reduced unrealized gains on available-for-sale investments of $80 million and treasury stock
purchases of $20 million. The decrease was partially offset by additions to equity for
year-to-date net income of $61 million and stock issued under various incentive plans of $6
million. The unrealized gains included in accumulated other comprehensive income are presented
after related adjustments to DAC, VOBA, capitalized deferred sales inducements, closed block
policyowner dividend obligation, unearned revenue reserves and deferred income taxes. PROTECTION PRODUCTS Our protection products segment primarily consists of interest-sensitive whole life, term
life, universal life and indexed life insurance policies. These products are marketed on a
national basis primarily through CMOs, a PPGA distribution system, IMOs and a New York distribution
system. Included in protection products is the closed block of ALIC and the closed block of ILIC,
established when the companies reorganized from mutual companies to stock companies. When
protection products are sold, we invest the premiums we receive in our investment portfolio and
establish a liability representing our commitment to the policyowner. We manage investment spread
by seeking to maximize the return on these invested assets, consistent with our asset/liability and
credit quality policies. 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 $98.9
billion at March 31, 2005 and $97.5 billion at December 31, 2004. Protection products in force is
a performance measure utilized by investors, analysts and the Company to assess the Companys
position in the industry. A summary of our protection products segment operations follows: 23




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For The Three Months Ended March 31,2005
    
    
    2004($ in thousands)Revenues:Insurance premiums
    
    $
    61,483
    
    
    $
    69,716Product charges
    
    
    47,077
    
    
    
    35,459Net investment income
    
    
    86,886
    
    
    
    81,258Realized gains on closed block investments
    
    
    130
    
    
    
    830Other income
    
    
    861
    
    
    
    906Total revenues
    
    
    196,437
    
    
    
    188,169Benefits and expenses:Policyowner benefits
    
    
    89,201
    
    
    
    93,395Underwriting, acquisition and other expenses
    
    
    18,393
    
    
    
    16,958Amortization of DAC and VOBA, net of open block
gain/loss adjustment
    
    
    24,871
    
    
    
    19,241Dividends to policyowners
    
    
    20,002
    
    
    
    25,484Total benefits and expenses
    
    
    152,467
    
    
    
    155,078Pre-tax operating income  Protection Products segment
    
    $
    43,970
    
    
    $
    33,091
 Pre-tax operating income from our protection products increased 33% in the first quarter of
2005 compared to the first quarter of 2004. The increase was primarily due to higher open block
product margins, in particular increased product charges and net investment income. The increase
was partially reduced by higher expenses and DAC and VOBA amortization. The key drivers of our
protection products business include sales, persistency, net investment income, mortality and
expenses. Sales.Sales are a key driver of our business as they are a leading indicator of future
revenue trends to emerge in segment operating income. Sales are presented as annualized premium
which is in accordance with industry practice, and represent the amount of new business sold during
the period. Sales are a performance metric which we use to measure the productivity of our
distribution network and for compensation of sales and marketing employees and agents. The
following table summarizes annualized premium by life insurance product: Sales Activity by ProductFor The Three Months Ended March 31,2005
    
    
    2004($ in thousands)Traditional life insurance:Interest-sensitive whole life
    
    $
    106
    
    
    $
    3,418Term and other life
    
    
    3,057
    
    
    
    3,575Universal life
    
    
    4,871
    
    
    
    7,534Indexed life
    
    
    18,026
    
    
    
    17,303Total
    
    $
    26,060
    
    
    $
    31,830
 Direct first year annualized premiums decreased 18% in the first quarter of 2005 compared to
the first quarter of 2004. We continue to focus our marketing efforts on indexed life products. In
the first three months of 2005, sales of 24




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indexed life products were $18.0 million as compared to
$17.3 million for 2004 and comprised 69% of total direct sales in the first quarter of 2005
compared to 54% in the first quarter of 2004. We are a leading writer of indexed life products in
the United States. Interest-sensitive whole life insurance sales decreased in the first quarter of
2005 compared to 2004 due to our sales focus on indexed products and
our withdrawal from
certain tax-advantaged markets. Universal life insurance sales decreased between periods as a
result of pricing changes associated with products launched in January 2005. Pricing for the new universal life products
reflect higher reinsurance costs and increased mortality expectations in the senior age markets.
We also continue to de-emphasize our term insurance products. Premiums and Product Charges.We recognize premiums on traditional life insurance policies as
revenues when the premiums are due. Amounts received as payments for universal life and indexed
life insurance policies are not recorded as premium revenue, but are instead recorded as a
policyowner liability. Revenues from the universal life and indexed life policies consist of
charges for the cost of insurance, policy administration and policy surrender and are shown as
product charges. All revenue is reported net of reinsurance ceded. Insurance premium revenue was lower in the first quarter of 2005 as compared to the first
quarter of 2004 primarily due to a decline in closed block in force business and our shift in
product mix from traditional to indexed life products. Product charge revenue was higher in 2005
as compared to 2004 due to growth in the indexed life block of business. Persistency.Persistency, which we measure in terms of a lapse rate, is a key driver of our
business because it refers to the policies which remain in our block of business. A low lapse rate
means higher persistency indicating more business is remaining in force to generate future
revenues. Annualized lapse rates, based on a rolling four quarter period, were 6.5% as of March
31, 2005 compared to 6.3% as of March 31, 2004. This slight increase in our lapses primarily
resulted from the dividend reductions we made on our policies. Our persistency experience remained
within our pricing assumptions. Net Investment Income.Net investment income is a key driver of our business as it reflects
earnings on our invested assets. Net investment income increased for the first quarter of 2005 as
compared to the same period a year ago primarily as a result of the growth in protection products
assets which were approximately $452 million higher in the first quarter of 2005 compared to the
first quarter of 2004. The year-to-date earned rate of the investment portfolio was 6.35% compared
to 6.48% a year ago. Mortality and Benefit Expense.Mortality is a key driver of our business as it impacts the
amount of our benefit expense. We utilize reinsurance to reduce the effects of mortality risk. We
experienced unfavorable mortality in the first quarter 2005 as compared to the same period a year
ago, primarily in the closed block. However, a significant amount of the increased mortality in
this period was offset by reserves released on these elevated claims. Our open block mortality
experience continues to be in line with our pricing assumptions. Interest benefit expense increased in the first quarter of 2005 as compared to the same period
in 2004 due to the growth in our in force block of indexed life, universal life and
interest-sensitive whole life business. The increased mortality and interest benefit expense in
the first quarter of 2005 was offset by reserves released on the excess mortality and by
reduced surrender benefit activity, resulting in a decrease in policyowner benefits of $4.2
million. Underwriting, Acquisition and Other Expenses.Underwriting, acquisition and other expenses
are a key driver of our business as they are costs of our operations. Expenses increased for the
first quarter of 2005 compared to the same period of 2004 primarily due to higher employee benefit
costs and additional expenses of integrating ILIC in force policy services and data center
activities from the Woodbury, New York site to Des Moines. 25




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##### Table of Contents



Amortization of DAC and VOBA.The amortization of DAC and VOBA are expense items which
increased for the first quarter 2005 as compared to the respective period in 2004. DAC and VOBA
are generally amortized in proportion to policy gross margins which increased in 2005, resulting in
higher amortization expense. Dividends to Policyowners.In addition to basic policyowner dividends, dividend expense
includes increases or decreases to the closed block policyowner dividend obligation liability
carried on the consolidated balance sheet. The actual results of the closed block are adjusted to
equal the expected earnings based on the actuarial calculation at the time of formation of the
closed block (which we refer to as the closed block glide path). The adjustment to have the closed
block operating results equal the closed block glide path is made to dividend expense. If the
actual results for the period exceed the closed block glide path, increased dividend expense is
recorded as a policyowner dividend obligation to reduce the actual closed block results. For
actual results less than the closed block glide path, dividend expense is reduced to increase the
actual closed block results. As a result of this accounting treatment, operating earnings from the
closed block only include the predetermined closed block glide path. Dividend expense decreased for the first quarter of 2005 compared to the first quarter of
2004. This reduction was primarily due to closed block dividend reductions. Outlook.We will continue to focus our sales on indexed life products which we expect will
favorably impact our product margins. We also expect to incur additional expenses in 2005 to
further integrate administrative functions to enhance operating efficiencies in future periods. ACCUMULATION PRODUCTS Our accumulation products segment primary offerings consist of individual fixed annuities
and funding agreements. The fixed annuities are marketed on a national basis primarily through
IMOs and independent brokers. Similar to our protection products segment, we invest the premiums
we receive from accumulation product deposits in our investment portfolio and establish a liability
representing our commitment to the policyowner. We manage product spread by seeking to maximize
the return on our invested assets consistent with our asset/liability management and credit quality
policies. When appropriate, we periodically reset the interest rates credited to our policyowner
liability. Accumulation products reserves totaled $12.6 billion at March 31, 2005 and $12.3
billion at December 31, 2004. A summary of our accumulation products segment operations follows: 26




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For The Three Months Ended March 31,2005
    
    
    2004($ in thousands)Revenues:Immediate annuity and supplementary contract premiums
    
    $
    480
    
    
    $
    723Product charges
    
    
    11,956
    
    
    
    14,103Net investment income
    
    
    181,646
    
    
    
    174,263Other income
    
    
    2,541
    
    
    
    2,751Total revenues
    
    
    196,623
    
    
    
    191,840Benefits and expenses:Policyowner benefits
    
    
    124,728
    
    
    
    120,818Underwriting, acquisition and other expenses
    
    
    7,260
    
    
    
    6,332Amortization of DAC and VOBA
    
    
    25,047
    
    
    
    29,930Dividends to policyowners
    
    
    1
    
    
    
    Total benefits and expenses
    
    
    157,036
    
    
    
    157,080IMO Operations:Other income
    
    
    9,011
    
    
    
    6,736Other expenses
    
    
    7,931
    
    
    
    4,496Net IMO operating income
    
    
    1,080
    
    
    
    2,240Pre-tax operating income  Accumulation Products segment
    
    $
    40,667
    
    
    $
    37,000
 Pre-tax operating income from our accumulation products operations increased 10% in
the first quarter of 2005 compared to 2004 primarily due to higher assets and increased product
spread. The drivers of profitability in our accumulation products business include deposits,
persistency, product spread, expenses and IMO operations. Deposits.Deposits are a key driver of our business as this is a measure which represents
collected premiums to be deposited to policyowner accounts for which we will earn a future product
spread. Deposits are presented as collected premiums, which are measured in accordance with
industry practice, and represent the amount of new business sold during the period. Deposits are a
performance metric which we use to measure the productivity of our distribution network and for
compensation of sales and marketing employees and agents. The following table summarizes our
accumulation products segment deposits: 27




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Deposits by ProductFor The Three Months Ended March 31,2005
    
    
    2004($ in thousands)Annuities
Deferred fixed annuities:Traditional fixed annuities
    
    $
    68,882
    
    
    $
    82,170Indexed annuities
    
    
    503,070
    
    
    
    296,875Variable annuities
    
    
    545
    
    
    
    852Total annuities
    
    
    572,497
    
    
    
    379,897Reinsurance ceded
    
    
    (1,970
    )
    
    
    (3,196
    )Total deposits, net of reinsurance
    
    $
    570,527
    
    
    $
    376,701
 Direct annuity deposits increased 51% in the first quarter of 2005 compared to the
first quarter 2004. Deposits increased in 2005 as compared to 2004 primarily due to our indexed
annuities. Indexed annuities comprised 88% of total direct annuity deposits in the first quarter of
2005 compared to 78% in the first quarter of 2004. Our wholly-owned and proprietary organizations
accounted for approximately 84% of our annuity deposits in the first quarter of 2005 compared to
75% in the first quarter of 2004. Product Charges.The deposits we receive on accumulation products are not recorded as revenue
but instead as a policyowner liability. Surrender charges collected on accumulation products are
recorded as revenue and shown as a product charge. Product charges decreased in the first quarter
of 2005 as compared to the first quarter of 2004 due to fewer policy withdrawals within the
surrender charge period. Persistency.Persistency, which we measure in terms of a withdrawal rate, is a key driver of
our business as it refers to the policies which remain in our block of business. A low withdrawal
rate reflects higher persistency indicating more business is remaining in force to generate future
revenues. Withdrawals represent funds taken out of accumulation products by policyowners not
including those due to the death of policyowners. Annuity withdrawal rates without internal
replacements, based on a rolling four quarter period, continued to improve in 2005 and amounted to
8.0% and 9.0% as of March 31, 2005 and 2004, respectively. Annuity withdrawals without internal
replacements totaled $243.2 million and $295.8 million for the first three months of 2005 and 2004,
respectively. Our withdrawal experience remained within our pricing assumptions. Product Spread.Product spread is a key driver of our business as it measures the difference
between the income earned on our invested assets and the rate which we credit to policyowners, with
the difference reflected as segment operating income. Asset earned rates and liability crediting
rates, based on a rolling four quarter period, were as follows for our annuity products: For The Twelve Months Ended March 31,2005
    
    
    2004Asset earned rate
    
    
    5.74
    %
    
    
    5.82
    %Liability credited rate
    
    
    3.53
    %
    
    
    3.81
    %Product spread
    
    
    2.21
    %
    
    
    2.01
    %
 28




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The product spread increased 20 basis points to 221 basis points for the first quarter
of 2005 compared to the first quarter of 2004. Liability crediting rates were lowered throughout
2004 to correspond with the decline in investment yields caused by the overall combined lower rates
for new and reinvested funds. At March 31, 2005, the account value of traditional annuities totaled $6.4 billion of which
approximately 94% have minimum guarantee rates ranging from 3% to 4%. For traditional annuities
with an account value of $4.7 billion, the credited rate was equal to the minimum guarantee rate,
and as a result, the credited rate cannot be lowered. Traditional annuities with an account value
of $1.1 billion had a multi-year guarantee for which the credited rate cannot be decreased until
the end of the multi-year period. At the end of the multi-year period, we will have the ability to
lower the crediting rate to the minimum
guaranteed rate by an average of approximately 275 basis points. The remaining multi-year
period is generally either one or two years. Due to these limitations on the ability to lower
interest crediting rates and the potential for additional credit defaults and lower reinvestment
rates on investments, we could experience spread compression in future periods. Underwriting, Acquisition and Other Expenses.Underwriting, acquisition and other expenses are
a key driver of our business as they are costs of our operations. Expenses increased for the first
quarter of 2005 compared to the same period of 2004 primarily due to non-deferrable agent
commissions associated with a new policy persistency program started in 2004. Amortization of DAC and VOBA.The amortization of DAC and VOBA decreased for the first quarter
of 2005 compared to the first quarter of 2004. During the third quarter of 2004, projected future
margin items for DAC and VOBA amortization were updated with current estimates. These updated
projected margins continued to be appropriate for first quarter of 2005 amortization and, as a
result, DAC and VOBA amortization in the first quarter of 2005 is lower than for the same period in
2004. IMO Operations.IMO Operations are a key driver of our business as the earnings from the IMOs
are a component of the accumulation products segment operating income. IMOs have contractual
arrangements to promote our insurance products in their networks of agents and brokers.
Additionally, they also contract with third party insurance companies. We own four such IMOs. The
income from IMO operations primarily represents annuity commissions received by our IMOs from those
third party insurance companies. Net IMO operating income decreased in the first quarter of 2005
compared to the first quarter of 2004 primarily due to changes in distribution strategies and
higher operating expenses, including litigation costs. Outlook.We anticipate increased product sales from our owned and proprietary distribution
organizations but decreased product sales from other distribution channels as we manage our sales
in this current low interest rate environment. We also expect to continue our sales focus on the
indexed annuity products and to actively manage surrenders. We will continue to manage our spreads
as we strive for our desired profitability in this economic environment. OTHER The other operations consist of our non-core lines of business outside of protection and
accumulation products. These lines of business include holding company revenues and expenses,
operations of our real estate management subsidiary, and accident and health insurance. The pre-tax
operating loss of our other operations in the first quarter of 2005 increased as compared to the
first quarter of 2004 primarily as a result of gains on an equipment transaction and an employee
postretirement benefit plan curtailment which occurred in the first quarter of 2004. 29




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INCOME STATEMENT RECONCILIATION A reconciliation of our segment pre-tax operating income to net income as shown in our
consolidated statements of income follows: For The Three Months Ended March 31,2005
    
    
    2004($ in thousands)Segment pre-tax operating income:Protection Products
    
    $
    43,970
    
    
    $
    33,091Accumulation Products
    
    
    40,667
    
    
    
    37,000Other operations
    
    
    (5,769
    )
    
    
    (1,775
    )Total segment pre-tax operating income
    
    
    78,868
    
    
    
    68,316Non-segment items  increases (decreases) to
income:Realized and unrealized gains (losses) on
assets and liabilities:Realized/unrealized gains (losses) on
open block assets
    
    
    177
    
    
    
    (24,730
    )Unrealized gains (losses) on open block
options and
trading investments
    
    
    (49,251
    )
    
    
    23,815Change in option value of indexed products
and market value adjustments on total
return
strategy annuities
    
    
    44,334
    
    
    
    (23,733
    )Cash flow hedge amortization
    
    
    39
    
    
    
    (462
    )Amortization of DAC and VOBA due to open
block
realized/unrealized gains and losses
    
    
    (2,825
    )
    
    
    1,260Other loss from non-insurance operations
    
    
    (377
    )
    
    
    (199
    )Income from continuing operations
    
    
    70,965
    
    
    
    44,267Interest expense
    
    
    (7,780
    )
    
    
    (8,398
    )Income tax expense
    
    
    (1,697
    )
    
    
    (6,129
    )Net income from continuing operations
    
    
    61,488
    
    
    
    29,740Income from discontinued operations, net of tax
    
    
    
    
    
    
    3,899Cumulative effect of change in accounting, net of tax
    
    
    
    
    
    
    (510
    )Net income
    
    $
    61,488
    
    
    $
    33,129
 Realized and Unrealized Gains (Losses) on Assets and Liabilities.Realized gains
(losses) on open block assets will fluctuate from period to period depending on the prevailing
interest rate, the economic environment and the timing of investment sales and credit events. As
part of managing our invested assets, we routinely sell securities and realize gains and losses. In
addition, in the first quarter of 2004, we recognized a pre-tax impairment loss of $12.2 million on
our Indianapolis, Indiana office building. The building, which was listed for sale in 2003, was
sold in the third quarter of 2004. Unrealized gains (losses) on open block options and trading investments also will fluctuate
from period to period depending on the prevailing interest rate, the economic environment and
credit events. We use options to hedge our indexed products. In accounting
for derivatives, we adjusted our options to market value, which, due to the 30




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economic environment and stock market conditions, resulted in an unrealized loss of $27.6 million
and an unrealized gain of $6.2 million in the first quarter of 2005 and 2004,
respectively. In addition, we also have trading securities that back our total return strategy
traditional annuity products. The market value adjustment on the trading securities resulted in an
unrealized loss of $21.7 million and an unrealized gain of $17.7 million in the first
quarter of 2005 and 2004, 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
indexed product reserves and to the total return strategy annuity reserves. The reserve adjustments
are reflected in policyowner benefits expense in the consolidated statements of income and are
included in the fair value change as decreased expense of $44.3 million and additional expense of
$23.7 million in the first quarter of 2005 and 2004, respectively. The fair value change in options embedded within our indexed products and the fair value
changes on our total return strategy fixed annuity contracts are being recorded at fair value. As
previously discussed, these fair value changes are offset by similar adjustments to unrealized
gains (losses) on investments related to the fair value changes on the options that hedge the
indexed products and on the trading securities that back the total return strategy products. Income Tax Expense.The effective income tax rate for the first quarter of 2005 and 2004
varied from the prevailing corporate rate primarily as a result of tax exempt interest, dividends
received deduction and a reduction in the income tax accrual. The accrual reduction amounting to
$19.9 million and $5.2 million in the first quarter of 2005 and 2004, respectively, was for the
release of provisions originally established for potential tax adjustments which have been settled
or eliminated. Discontinued Operations.In November 2003, we entered into an agreement to sell our
residential financing operations. The results of the residential financing operations have been
classified as discontinued operations. The sale was completed in January 2004, resulting in an
after-tax gain of $3.9 million. Change in Accounting.Effective January 1, 2004, the Company adopted SOP 03-1 resulting in the
establishment of additional policy reserve liabilities for fees charged for insurance benefit
features which are assessed in a manner that is expected to result in profits in earlier years and
losses in subsequent years. The total effect of adopting SOP 03-1 (including reinsurance
recoverables) as of January 1, 2004, amounted to a decrease of $0.8 million ($0.5 million
after-tax) in net income which has been reflected as a cumulative effect of a change in accounting. ACCOUNTING DEVELOPMENTS In December 2004, the FASB issued a revision to SFAS 123, Share-Based Payment, (SFAS 123R)
which is a revision of SFAS 123, Accounting for Stock-Based Compensation, (SFAS 123). SFAS 123R
requires all share-based payments to employees, including grants of employee stock options, to be
recognized in the income statement based on fair values. Pro forma disclosure of fair value
information is no longer an alternative. The implementation date of the statement has been delayed
to be effective for the fiscal year
beginning after June 15, 2005. Adoption is to be made using either the modified prospective method
or the modified retrospective method. The modified prospective method recognizes cost based on the
requirements for all share-based payments granted after the effective date and for awards granted
prior to the effective date that remain unvested prior to the effective date. The modified
retrospective method includes the requirements of the modified prospective method but also permits
restatement of financial statements based on pro forma amounts previously recognized under SFAS
123. Restatement can either be for all prior periods presented or prior interim periods of the year
of adoption. Early adoption is permitted. We continue to evaluate the impacts of SFAS 123R which we
will adopt January 1, 2006. We currently disclose the pro forma impacts of recognizing fair value
as permitted by SFAS 123 in note 1 to the consolidated financial statements. 31




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LIQUIDITY AND CAPITAL RESOURCES AmerUs Group Co. As a holding company, AmerUs Group Co.s cash flows from operations consist of dividends from
subsidiaries, if declared and paid, interest from income on loans and advances to subsidiaries
(including a surplus note issued to us by ALIC), investment income on our assets and fees which we
charge our subsidiaries, offset by the expenses incurred for debt service, salaries and other
expenses. 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. We also consider
risk-based capital levels, capital and liquidity operating needs, and other factors prior to paying
dividends from the insurance subsidiaries. Based on the state law limitations and 2004 results, our
life insurance subsidiaries could pay us an estimated $186 million in dividends in 2005 without
obtaining regulatory approval. Our subsidiaries paid no dividends in the first three months of
2005. We have a $200 million revolving credit facility, which we refer to as the Revolving Credit
Agreement, with a syndicate of lenders. As of March 31, 2005, there was no 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, (d) must cause our insurance subsidiaries to
maintain certain levels of risk-based capital, and (e) are prohibited from incurring additional
indebtedness for borrowed money in excess of certain limits typical for such lines of credit. We
closely monitor all of these covenants to ensure continued compliance. We also have $125 million
senior notes payable which will
mature and become payable in June 2005. We may utilize our Revolving Credit Agreement to retire
these senior notes. The Company has several options for deploying excess capital, including supporting higher
sales growth, reducing debt levels, pursuing acquisitions and buying back common stock. 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 and dividends from insurance subsidiaries. On March 31, 2005, we purchased
414,000 shares of our common stock pursuant to an accelerated share repurchase program. The program
allowed the Company to purchase the shares immediately, with a third party purchasing the shares in
the open market over the next few months. The initial purchase price was $47.25 per share, plus
commission, subject to a market price adjustment feature based on the actual cost of the shares
purchased. Approximately 1.6 million shares remain available for repurchase under the purchase
program. We manage liquidity on a continuing basis. One way is to minimize our need for capital. We
accomplish this by attempting to use our capital as efficiently as possible and by developing
capital-efficient products in our insurance subsidiaries. We also manage our mix of sales by
focusing on the more capital-efficient products. In addition, we use reinsurance agreements, where
cost-effective, to reduce capital strain in the insurance subsidiaries. We also focus on optimizing
the consolidated capital structure to properly balance the levels and sources of borrowing and the
issuance of equity securities. 32




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##### Table of Contents



Insurance Subsidiaries The sources of cash of our insurance subsidiaries consist primarily of premium receipts;
deposits to policyowner account balances; and income from investments, sales, maturities and calls
of investments and repayments of investment principal. The uses of cash are primarily related to
withdrawals of policyowner account balances, investment purchases, payment of policy acquisition
costs, payment of policyowner benefits, repayment of debt, income taxes and current operating
expenses. Insurance companies generally produce a positive cash flow from operations, as measured
by the amount by which cash flows are adequate to meet benefit obligations to policyowners and
normal operating expenses as they are incurred. The remaining cash flow is generally used to
increase the asset base to provide funds to meet the need for future policy benefit payments and
for writing new business. Management believes that the current level of cash and available -for-sale, held-for-trading
and short-term securities, combined with expected net cash inflows from operations, maturities of
fixed maturity investments, principal payments on mortgage-backed securities and sales of its
insurance products, will be adequate to meet the anticipated short-term cash obligations of the
life insurance subsidiaries. Matching the investment portfolio maturities to the cash flow demands of the type of insurance
being provided is an important consideration for each type of protection product and accumulation
product. We continuously monitor benefits and surrenders to provide
projections of future cash requirements. As part of this monitoring process, we perform cash flow
testing of assets and liabilities under various scenarios to evaluate the adequacy of reserves. In
developing our investment strategy, we establish a level of cash and securities which, combined
with expected net cash inflows from operations and maturities and principal payments on fixed
maturity investment 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. In addition to the interest-sensitive products, our insurance subsidiaries have issued funding
agreements totaling $960 million outstanding as of March 31, 2005, consisting primarily of six to
ten year fixed rate insurance contracts. The assets backing the funding agreements are legally
segregated and are not subject to claims that arise out of any other business of the insurance
subsidiaries. The funding agreements are further backed by the general account assets of the
insurance subsidiaries. The segregated assets and liabilities are included with general account
assets in the financial statements. The funding agreements may not be cancelled by the holders
unless there is a default under the agreements, but the insurance subsidiaries may terminate the
agreements at any time. We also have variable separate account assets and liabilities representing funds that are
separately administered, principally for variable annuity contracts, and for which the
contract holder bears the investment risk. Separate account assets and liabilities are reported at
fair value and amounted to $233.5 million as of March 31, 2005. Separate account contractholders
generally have no claim against the assets of the general account, except with respect to certain
insurance benefits. 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,
Topeka and Indianapolis; ALIC, American and ILIC are eligible to borrow under variable -rate short
term federal funds 33




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##### Table of Contents



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 outstanding under these
arrangements at March 31, 2005. In addition, ALIC has long-term fixed rate advances from the FHLB
outstanding of $12.4 million at March 31, 2005. The insurance subsidiaries may also obtain liquidity through sales of investments. The
investment portfolio as of March 31, 2005 had a carrying value of $19.2 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. On February 15, 2005, Moodys Investor Services changed the
rating outlook for the Company and its insurance and other subsidiaries to negative from stable as
a result of uncertainties in connection with a lawsuit filed by the California Attorney General. On
February 17, 2005, Standard & Poors announced that our current A+ rating and our stable outlook
would be unaffected by this lawsuit. 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. We participate in a securities lending program whereby certain fixed maturity securities from
the investment portfolio are loaned to other institutions for a short period of time. We receive a
fee in exchange for the loan of securities and require initial collateral equal to 102 percent,
with an on-going level of 100 percent, of the market value of the loaned securities to be
separately maintained. Securities with a market value of approximately $436.0 million and $342.6
million were on loan under the program and we were liable for cash collateral under our control of
approximately $446.3 million and $351.7 million at March 31, 2005 and December 31, 2004,
respectively. The collateral held under the securities lending program has been included in cash
and cash equivalents in the consolidated balance sheet and the obligation to return the collateral
upon the return of the loaned securities has been included in accrued expenses and other
liabilities. We may also enter into securities borrowing arrangements from time to time whereby we borrow
securities from other institutions and pay a fee. Securities borrowed amounted to $135.1 million
and $138.2 million at March 31, 2005, and December 31, 2004, respectively, and are also included in
accrued expenses and other liabilities in the consolidated balance sheet. At March 31, 2005, the statutory surplus of the insurance subsidiaries was approximately
$1.1 billion.
Management believes that each life insurance company has statutory capital which provides adequate
risk based capital that exceeds required levels. In the future, in addition to cash flows from operations and borrowing capacity, the insurance
subsidiaries may obtain their required capital from AmerUs Group Co. 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk The main objectives in managing our investment portfolios and our insurance subsidiaries are
to maximize investment income and total investment returns while minimizing credit risks in order
to provide maximum support to the insurance underwriting operations. Investment strategies are
developed based on many factors including asset liability management, regulatory requirements,
fluctuations in interest rates and consideration of other market risks. Investment decisions are
centrally managed by investment professionals based on guidelines established by management and
approved by the board of directors. Market risk represents the potential for loss due to adverse changes in the fair value of
financial instruments. The market risks related to our financial instruments primarily relate to
the investment portfolio, which exposes us to risks related to interest rates, credit quality and
prepayment variation. Analytical tools and monitoring systems are in place to assess each of these
elements of market risk. 34




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##### Table of Contents



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 cash flow pattern of our
liabilities to determine their duration. This is then compared to the characteristics of the
assets that are currently backing the liabilities to arrive at an asset allocation strategy for
future investments that management believes mitigates the overall effect of interest rates. For variable and indexed products, profitability on the portion of the policyowner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 policyowner assumes essentially all the investment earnings risk for the portion of
the account balance invested in the separate accounts. For the indexed products, we primarily
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 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 indexed products is also impacted by changes in the fair value of the embedded
option which provides the contract holder the right to participate in market index returns after
the next anniversary date of the contract. This impacts profitability as we primarily purchase
one-year call options to fund the returns owed to the contract holders at the inception of each
contract year. This practice matches with the contract holders rights to switch to different
indices on each anniversary date. The value of the forward starting options embedded in the
indexed products can fluctuate with changes in assumptions as to future volatility of the market
indices, risk free interest rates, market returns and the lives of the contracts. The following table provides information about our fixed maturity investments and mortgage
loans for both our trading and other than trading portfolios at March 31, 2005. The table presents
amortized cost and related weighted average interest rates by expected maturity dates. The
amortized cost approximates the cash flows of principal amounts in each of the periods. The cash
flows are based on the earlier of the call date or the maturity date or, for mortgage-backed
securities, expected payment patterns. Actual cash flows could differ from the expected amounts. 9 months
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expected2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    Thereafter
    
    
    Cash Flows
    
    
    Fair Value($ in thousands)Fixed maturity securities
available-for-sale
    
    $
    819
    
    
    $
    899
    
    
    $
    1,072
    
    
    $
    1,138
    
    
    $
    926
    
    
    $
    622
    
    
    $
    10,021
    
    
    $
    15,497
    
    
    $
    15,741Average interest rate
    
    
    6.4
    %
    
    
    6.5
    %
    
    
    6.2
    %
    
    
    5.9
    %
    
    
    6.0
    %
    
    
    5.6
    %
    
    
    5.8
    %Fixed maturity securities
held for trading purposes
    

    $
    68
    
    
    $
    163
    
    
    $
    198
    
    
    $
    274
    
    
    $
    232
    
    
    $
    131
    
    
    $
    536
    
    
    $
    1,602
    
    
    $
    1,602Average interest rate
    
    
    3.8
    %
    
    
    2.8
    %
    
    
    3.4
    %
    
    
    2.8
    %
    
    
    2.5
    %
    
    
    3.2
    %
    
    
    4.1
    %Mortgage loans
    
    $
    41
    
    
    $
    59
    
    
    $
    56
    
    
    $
    69
    
    
    $
    65
    
    
    $
    70
    
    
    $
    515
    
    
    $
    875
    
    
    $
    897Average interest rate
    
    
    7.2
    %
    
    
    7.3
    %
    
    
    7.3
    %
    
    
    7.2
    %
    
    
    7.2
    %
    
    
    7.2
    %
    
    
    6.9
    %Total
    
    $
    928
    
    
    $
    1,121
    
    
    $
    1,326
    
    
    $
    1,481
    
    
    $
    1,223
    
    
    $
    823
    
    
    $
    11,072
    
    
    $
    17,974
    
    
    $
    18,240
 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 63% of our
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 7.7% of the bond portfolio is
below investment grade. Fixed maturity securities have an average life of approximately 9.13
years. Prepayment risk refers to the changes in prepayment patterns that can either shorten or
lengthen the expected timing of the principal repayments and thus the average life and the
effective yield of a security. Such risk exists 35




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##### Table of Contents



primarily within the portfolio of mortgage-backed
securities. Management monitors such risk regularly. We invest primarily in those classes of
mortgage-backed securities that have average or lower prepayment risk. Our use of derivatives is generally limited to hedging purposes and has principally consisted
of using interest rate swaps, options and futures. 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
bonds. However, returns over longer time frames have been consistently higher. All of the above risks are monitored on an ongoing basis. A combination of in-house systems
and proprietary models and externally licensed software are used to analyze individual securities
as well as each portfolio. These tools provide the portfolio managers with information to assist
them in the evaluation of the market risks of the portfolio. 
 Item 4. Controls and Procedures (a) Based upon their evaluation as of the end of the period covered by this Quarterly Report on
Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act
of 1934, as amended, are effective for recording, processing, summarizing and reporting the
information we are required to disclose in our reports filed under such act. (b) There was no change in our internal control over financial reporting during our last fiscal
quarter that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting. 
 PART II  OTHER INFORMATION 
 Item 1. Legal Proceedings In recent years, the life insurance industry, including the Company and its subsidiaries,
has 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
routinely involved in litigation and other proceedings, including class actions, reinsurance claims
and regulatory proceedings arising in the ordinary course of its business. Some of these claims and
legal actions are in jurisdictions where juries are given substantial latitude in assessing
damages, including punitive and exemplary damages. In addition, regulatory bodies, such as state
insurance departments and attorneys general, periodically make inquiries and conduct examinations
concerning the Companys compliance with insurance and other laws. The Company responds to such
inquiries and cooperates with regulatory examinations in the ordinary course of business. On
April 7, 2005, a national class action complaint was filed in the U.S. District Court for
the Central District of California against the Company and certain of its subsidiaries alleging
conduct and causes of action, and seeking relief, similar to that alleged in class action lawsuits
in California state courts described in the Companys 2004 Annual Report on Form 10-K. On April
25, 2005 a similar national class action complaint was filed in the U.S. District Court for the
District of Kansas against a subsidiary of the Company. These class
actions were brought on behalf of purchasers of annuity products
claiming that the products and manner in which they were sold were
inappropriate for the senior citizen market. The Company continues to
believe it has appropriate defenses against these lawsuits and intends to vigorously defend its
position. 36




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##### Table of Contents



The Companys pending litigation (including without limitation the proceedings described in
the immediately preceding paragraph) is subject to many uncertainties, and given its complexity and
scope, the outcomes cannot be predicted. Given these uncertainties, the Company is unable to
estimate the possible loss or range of loss that may result from the Companys pending litigation.
It is possible that the Companys results of operations or cash flow in a particular quarterly or
annual period could be materially affected by an ultimate unfavorable resolution of pending
litigation and regulatory matters depending, in part, upon the results of operations or cash flow
for such period. 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 the Companys
pending claims and legal actions, would have no material effect on its operations and financial
position. 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The following table sets forth information regarding purchases of equity securities for the
three months ended March 31, 2005: (c) Total number
    
    
    (d) Maximum numberof shares (or
    
    
    (or approximate dollar(a) Total
    
    
    (b) Average
    
    
    units) purchased
    
    
    value) of sharesnumber of
    
    
    price paid
    
    
    as part of publicly
    
    
    (or units) that mayshares (or units)
    
    
    per share
    
    
    announced plans
    
    
    yet be purchased underPeriod
    
    purchased (1)
    
    
    (or units)
    
    
    or programs
    
    
    the plans or programs (3)01/01/2005-01/31/2005
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    2,027,50002/01/2005-02/28/2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,027,50003/01/2005-03/31/2005
    
    
    441,236
    (2)
    
    
    47.36
    
    
    
    441,236
    
    
    
    1,613,500Total
    
    
    441,236
    
    
    $
    47.36
    
    
    
    441,236
   (1)
    
    Does not include shares withheld from employee stock awards to satisfy applicable tax withholding obligations.(2)
    
    The March 2005 shares purchased included
414,000 shares which were part of the repurchase program described in
note 3 and 27,236 shares purchased by the Companys
Employee Stock Ownership Plan.(3)
    
    In August 2002, our board of directors authorized a repurchase program of up to 3 million shares of our
outstanding common stock. There is no expiration date for this program. 
 Item 6. 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. 37




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##### Table of Contents



SIGNATURES Pursuant to the requirements 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: May 5, 2005
    
    
    
    AMERUS GROUP CO.By
    
    /s/ Melinda S. UrionMelinda S. UrionExecutive Vice President,Chief Financial Officer and Treasurer(Principal Financial Officer)By
    
    /s/ Brenda J. CushingBrenda J. CushingSenior Vice President and Controller(Principal Accounting Officer)
 38




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##### Table of Contents



AMERUS GROUP CO. AND SUBSIDIARIES 
 INDEX TO EXHIBITS ExhibitNo.
    
    Description2.1
    
    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.2.2
    
    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.2.3
    
    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.2.4
    
    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.2.5
    
    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.2.6
    
    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.2.7
    
    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.2.8
    
    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.2.9
    
    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.2.10
    
    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,
files as Exhibit 2.13 on Form 10-Q dated August 12, 2002, is hereby incorporated by reference.3.1*
    
    Amended and Restated Articles of Incorporation of the Registrant as of May 20, 2004.3.2
    
    Amended and Restated Bylaws of the Registrant, filed as Exhibit 3.2 on Form 10-Q, dated
August 6, 2004, 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
 39




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##### Table of Contents



ExhibitNo.
    
    DescriptionCapital 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
    
    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.4.5
    
    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.4.6
    
    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.4.7
    
    First Supplement to Indenture dated February 3, 1997 among American Mutual Holding Company,
AmerUs Life Holdings, Inc. and Wilmington Trust Company as Trustee, relating to the Companys
8.85% Junior Subordinated Debentures, Series A, dated September 20, 2000, filed as Exhibit
4.14 on Form 10-Q dated November 14, 2000, is hereby incorporated by reference.4.8
    
    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.4.9
    
    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.4.10
    
    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.4.11
    
    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.4.12
    
    Form of Purchase Contract Agreement between AmerUs Group Co. and Wachovia Bank, National
Association (formerly known as First Union National Bank), as Purchase Contract Agent, filed
as Exhibit 4.1 on Form 8-A12B, dated May 22, 2003, is hereby incorporated by reference.4.13
    
    Form of Pledge Agreement among AmerUs Group Co., BNY Midwest Trust Company, as Collateral
Agent, Custodial Agent and Securities Intermediary and Wachovia Bank, National Association
(formerly known as First Union National Bank), as Purchase Contract Agent, filed as Exhibit
4.2 on Form 8-A12B dated May 22, 2003, is hereby incorporated by reference.4.14
    
    Form of Remarketing Agreement among AmerUs Group Co., Wachovia Bank, National Association
(formerly known as First Union National Bank), as Purchase Contract Agent, and the Remarketing
Agent named therein, filed as Exhibit 4.3 on Form 8-A12B dated May 22, 2003, is hereby
incorporated by reference.4.15
    
    Form of Income PRIDES (included in Exhibit 4.1 as Exhibit A thereto), filed as Exhibit 4.1 on
Form 8-A12B, dated May 22, 2003, is hereby incorporated by reference.4.16
    
    Officers Certificate attaching form of Senior Notes initially due 2008, filed as Exhibit 4.7
on Form 8-A12B, dated May 22, 2003, is hereby incorporated by reference.4.17
    
    Indenture dated as of December 15, 2004 between AmerUs Group Co. and BNY Midwest Trust
Company, as Trustee, filed as Exhibit 4.1 on Form 8-K, dated December 15, 2004, is hereby
incorporated by reference.4.18
    
    Form of Optionally Convertible Equity-Linked Accreting Note (OCEANsSM) due March
6, 2032, filed as Exhibit 4.2 on Form 8-K, dated December 15, 2004, is hereby incorporated by
reference.11.1
    
    Statement Re: Computation of Per Share Earnings is included in note 2 to the consolidated
financial statements.12*
    
    Computation of Ratios of Earnings to Fixed Charges.
 40




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##### Table of Contents



ExhibitNo.
    
    Description20.1
    
    Offering Circular dated November 16, 2004, to Exchange Optionally Convertible
Equity-Linked Accreting Notes (OCEANsSM) filed as Exhibit 20.1 on Form 8-K, dated
December 15, 2004, is hereby incorporated by reference.31.1*
    
    Certification of Chief Executive Officer of Periodic Report Pursuant to Rule 13a-15(e) or Rule 15d-15(e).31.2*
    
    Certification of Chief Financial Officer of Periodic Report Pursuant to Rule 13a-15(e) or Rule 15d-15(e).32.1*
    
    Certification of Chief Executive Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350.32.2*
    
    Certification of Chief Financial Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350.
   *
    
    Included herein 41