<PAGE>   1

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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                      ------------------------------------

                                   Form 10-K
                 Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

<TABLE>
<S>                                            <C>
For the fiscal year ended December 31, 2000                Commission File Number: 000-30898
</TABLE>

                      ------------------------------------

                                AMERUS GROUP CO.
             (Exact name of Registrant as specified in its charter)

                               699 WALNUT STREET
                          DES MOINES, IOWA 50309-3948
          (Address of principal executive offices, including zip code)

<TABLE>
<S>                                            <C>
                    IOWA                                        42-1458424
(State or other jurisdiction of incorporation      (I.R.S. Employer Identification No.)
               or organization)
</TABLE>

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (515) 362-3600
               REGISTRANT WAS FORMERLY AMERUS LIFE HOLDINGS, INC.
                      ------------------------------------

          Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
                                                                 NAME OF EXCHANGE
TITLE OF CLASS                                                  ON WHICH REGISTERED
--------------                                                -----------------------
<S>                                                           <C>
Common Stock (no par value).................................  New York Stock Exchange
7.00% Adjustable Conversion-rate Equity Security Units
issued by AmerUs Capital II, a subsidiary trust.............  New York Stock Exchange
</TABLE>

          Securities registered pursuant to Section 12(g) of the Act:

                              TITLE OF EACH CLASS
                  8.85% Capital Securities, Series A issued by
                      AmerUs Capital I, a subsidiary trust

                             Common Stock Warrants

                               6.95% Senior Notes

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (sec.229.405 of this chapter) is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. Yes [X].                 No [ ]

     Aggregate market value of voting stock held by non-affiliates of the
Registrant as of March 1, 2001: $894,053,260

     Number of shares outstanding of each of the Registrant's classes of common
stock on March 1, 2001 was as follows:

<TABLE>
    <S>                                                             <C>
    Common Stock................................................    30,010,840 shares
</TABLE>

                      DOCUMENTS INCORPORATED BY REFERENCE

Notice of 2001 Annual Meeting of Shareholders and Proxy Statement
(incorporated into Part III)
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<PAGE>   2

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                        PAGE
                                                                        ----
<S>       <C>                                                           <C>
PART I
Item 1.   Business....................................................    2
Item 2.   Properties..................................................   11
Item 3.   Legal Proceedings...........................................   11
Item 4.   Submission of Matters to a Vote of Security Holders.........   11
PART II
Item 5.   Market for Registrant's Common Equity and Related
          Stockholder Matters.........................................   12
Item 6.   Selected Financial Data.....................................   13
Item 7.   Management's Discussion and Analysis of Results of
          Operations and Financial Condition..........................   15
Item 7A.  Quantitative and Qualitative Disclosures About Market
          Risk........................................................   35
Item 8.   Financial Statements and Supplementary Data.................   36
Item 9.   Changes in and disagreements with Accountants on Accounting
          and Financial Disclosure....................................   36
PART III
Item 10.  Directors and Executive Officers of the Registrant..........   37
Item 11.  Executive Compensation......................................   37
Item 12.  Security Ownership of Certain Beneficial Owners and
          Management..................................................   37
Item 13.  Certain Relationships and Related Transactions..............   37
PART IV
Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form
          8-K.........................................................   37
Index to Exhibits.....................................................   38
Signatures............................................................   45
Index to Consolidated Financial Statements............................  F-1
Index to Consolidated Financial Statement Schedules...................  S-1
</TABLE>
<PAGE>   3

                             SAFE HARBOR STATEMENT

     All statements, trend analyses and other information contained in this
report relative to markets for the Company's products and trends in the
Company's operations or financial results, as well as other statements including
words such as "anticipate", "believe", "plan", "estimate", "expect", "intend",
and other similar expressions, constitute forward-looking statements under the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to known and unknown risks, uncertainties and other
factors which may cause actual results to be materially different from those
contemplated by the forward-looking statements. Such factors include, among
other things: (1) general economic conditions and other factors, including
prevailing interest rate levels and stock market performance, which may affect
the ability of the Company to sell its products, the market value of the
Company's investments and the lapse rate and profitability of policies; (2) the
Company's ability to achieve anticipated levels of operational efficiencies and
cost-saving initiatives and to meet cash requirements based upon projected
liquidity sources; (3) customer response to new products, distribution channels
and marketing initiatives; (4) mortality, morbidity, and other factors which may
affect the profitability of the Company's insurance products; (5) changes in the
Federal income tax laws and regulations which may affect the relative tax
advantages of some of the Company's products; (6) increasing competition in the
sale of insurance and annuities; (7) regulatory changes or actions, including
those relating to regulation of insurance products and of insurance companies;
(8) ratings assigned to the Company and its subsidiaries by independent rating
organizations which the Company believes are particularly important to the sale
of its products; (9) the performance of the investment portfolio including the
Indianapolis Life Insurance Company (ILICO) investment; (10) the ILICO
anticipated completion dates; and (11) unanticipated litigation. There can be no
assurance that other factors not currently anticipated by management will not
also materially and adversely affect the Company's results of operations.

                                        1
<PAGE>   4

                                     PART I

ITEM 1.  BUSINESS

GENERAL

     AmerUs Group Co. (Company) is a holding company engaged through its
subsidiaries in the business of marketing, underwriting and distributing a broad
range of individual life insurance and annuity products to individuals and
businesses in 49 states, the District of Columbia and the U.S. Virgin Islands.
The Company also owns a real estate management company in which it conducts
limited real estate management, development, syndication and marketing
activities. The Company has two reportable operating segments: Life Insurance
and Annuities. The Life Insurance segment's primary product offerings consist of
whole life, universal life and term life insurance policies. The primary product
offerings of the Annuity segment are fixed annuities.

     The Company sold certain lines of business and made the decision to exit
certain other businesses in 1998. These businesses are referred to as
discontinued operations and include the following activities: banking,
residential real estate brokerage, residential land development, and mortgage
banking.

REORGANIZATION

     The Company was formerly known as American Mutual Holding Company (AMHC)
and was a mutual insurance holding company whose principal asset was a 58%
interest in AmerUs Life Holdings, Inc. (ALHI). Public stockholders owned the
remaining 42% interest in ALHI (Minority Interest). ALHI was a holding company
which directly or indirectly owned three principal life insurance subsidiaries:
AmerUs Life Insurance Company (AmerUs), American Investors Life Insurance
Company (American) and Delta Life and Annuity Company (Delta Life). On September
20, 2000, AMHC converted to stock form, changed its name to AmerUs Group Co. and
acquired the Minority Interest of ALHI by issuing AmerUs Group Co. common stock
in exchange for the outstanding shares of ALHI held by the public. The value of
the stock exchange was approximately $298 million and ALHI merged into the
Company simultaneously with the stock exchange.

     Prior to the conversion of the Company to a stock form, the Company was
owned by individuals and entities who held insurance policies or annuity
contracts issued by AmerUs (Members). In the conversion, which is referred to as
a "demutualization", the Company distributed cash, policy credits and its newly
issued common stock to its Members in exchange for their membership interests.
The value of the distribution totaled approximately $792 million.

     The acquisition of the ALHI Minority Interest by the Company was accounted
for as a purchase and accordingly 42% of the book value of the assets and
liabilities of ALHI were adjusted to market value as of the acquisition date.
Approximately 42% of the ALHI earnings for the reporting periods up to the
acquisition date are reduced from the Company's results of operations on the
line titled "Minority interest" on the Company's Consolidated Statements of
Income. From the acquisition date forward, the Company's results of operations
include 100% of these earnings.

PROPOSED COMBINATION

     On February 18, 2000, the Company and Indianapolis Life Insurance Company
(ILICO) entered into a definitive agreement for a combination of the companies.
Under the original terms of the agreement, ILICO would demutualize and ILICO's
members would receive cash, policy credits and stock equivalent to the value of
11.25 million shares of the Company's stock and ILICO would become a
wholly-owned subsidiary of the Company. However, on September 18, 2000 the terms
of the agreement were revised to reduce the consideration to the equivalent of
the value of 9.3 million shares. The reduction in the number of shares was based
on several factors, including increased expenses related to ILICO's
demutualization, increased terminations of existing fixed annuities issued by
ILICO's annuity subsidiary, and a decrease in revenues and earnings in ILICO's
annuity subsidiary operations. These factors were partially offset by stronger
than expected performance of ILICO itself. As part of the agreement, the Company
made an investment of $100 million in a downstream holding company of ILICO in
February, 2000. ILICO is a 95-year old mutual life
                                        2
<PAGE>   5

insurance and annuity company based in Indianapolis, Indiana. ILICO and its
subsidiaries are licensed to do business in all 50 states and the District of
Columbia. At December 31, 2000, ILICO had total assets of $5.9 billion and
insurance in force of $32.2 billion. The combination transaction is subject to
normal closing conditions, including appropriate policyholder/member,
shareholder and regulatory approvals. The Company expects the demutualization of
ILICO and combination into the Company to take place in the second quarter of
2001.

LIFE INSURANCE SEGMENT

PRODUCTS

     The Company's individual life insurance premiums are from traditional life
insurance products and universal life insurance products, as set forth in the
following table:

<TABLE>
<CAPTION>
                                                                    SALES ACTIVITY BY PRODUCT
                                                              DIRECT FIRST YEAR ANNUALIZED PREMIUMS
                                                                FOR THE YEARS ENDED DECEMBER 31,
                                                              -------------------------------------
                                                                2000          1999          1998
                                                              ---------     ---------     ---------
                                                                        ($ IN THOUSANDS)
<S>                                                           <C>           <C>           <C>
Traditional life insurance:
  Participating whole life...............................      $14,161       $16,409       $17,943
  Term life..............................................        7,223         7,012         6,111
Universal life...........................................       18,129        14,314        10,005
                                                               -------       -------       -------
  Total..................................................      $39,513       $37,735       $34,059
                                                               =======       =======       =======
</TABLE>

     Traditional Life Insurance Products.  The Company's traditional life
insurance products have a long history of being highly competitive within the
industry. Traditional life insurance products include participating whole life
and term life insurance products.

     Participating whole life insurance is designed to provide benefits for the
life of the insured. This product generally provides for level premiums and a
level death benefit and requires payments in excess of the mortality cost in
earlier years to offset increasing mortality costs in later years. Sales of
participating whole life insurance decreased in 2000 and 1999, as compared to
each prior year due in part to the Company's introduction of new universal life
products which has resulted in a shift in focus from participating to universal
products. In addition, there has been an overall general industry decline in
sales of participating products.

     Term life insurance provides life insurance protection for a specific time
period (which generally can be renewed at an increased premium). Such policies
are mortality-based and offer no cash accumulation feature. Term life insurance
is a highly competitive and quickly changing market. Term life insurance sales
increased in 2000 and 1999 as compared to each prior year primarily as a result
of product repricing completed in mid-1999 along with an increase in consumer
demand for the product. Consumer demand for term products was generally up in
1999 as a result of legislative changes taking effect in January, 2000 which
were anticipated to impact product pricing.

     Since 1989, the Company has offered a flexible life insurance product,
which is a combination of permanent participating whole life insurance,
increasing paid-up additions and decreasing term insurance coverage. These
products give policyowners additional flexibility in designing an appropriate
combination of permanent and term life insurance coverages to meet their
specific needs at varying premium levels.

     For the year ended December 31, 2000, sales of participating whole life and
term life insurance products represented 36% and 18%, respectively, of first
year annualized premiums for all individual life insurance products sold by the
Company.

     Universal Life Insurance Products.  The Company offers universal life
insurance products, pursuant to which an insurance account is maintained for
each insurance policy. Premiums, net of specified expenses, are credited to the
account, as is interest, generally at a rate determined from time to time by the
Company.

                                        3
<PAGE>   6

Specific charges are made against the account for the cost of insurance and for
expenses. The universal life policy provides flexibility as to the amount and
timing of premium payments and the level of death benefits provided. The Company
also offers equity-linked universal life products. These products allow the
policyowner to elect an earnings strategy for a portion of the account value
whereby earnings are credited based on increases in the Standard & Poor's 500
Composite Stock Price Index(R), excluding dividends. The earnings credit is
subject to a participation rate and an annual cap. In 2000, sales of this
product represented approximately 17% of first year individual life insurance
annualized premiums.

     The Company's universal life insurance products provide benefits for the
life of the insured. Within limits established by the Company and state
regulations, policyowners may vary the premiums and the amount of the policy's
death benefit as long as there are sufficient policy funds available to cover
all policy charges for the coming period. Increased sales of universal life in
2000, 1999 and 1998 were primarily attributable to new universal life products
introduced in each year. The weighted average crediting rate for universal life
insurance liabilities was 5.62% for the year 2000, 5.67% for the year 1999 and
6.08% for the year 1998. For the year ended December 31, 2000, sales of
universal life insurance products represented 46% of first year annualized
premiums for all individual life insurance products sold by the Company.

     The following table sets forth the Company's collected individual life
premiums, including collected individual life premiums associated with the
Closed Block, for the periods indicated:

<TABLE>
<CAPTION>
                                                              COLLECTED PREMIUMS BY PRODUCT
                                                             FOR THE YEARS ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2000        1999        1998
                                                             --------    --------    --------
                                                                     ($ IN THOUSANDS)
<S>                                                          <C>         <C>         <C>
Individual life premiums collected:
  Traditional life:
     First year and single...............................    $ 83,849    $ 84,044    $ 82,219
     Renewal.............................................     185,078     179,780     173,079
                                                             --------    --------    --------
     Total...............................................     268,927     263,824     255,298
  Universal life:
     First year and single...............................      32,571      24,371      18,987
     Renewal.............................................      73,737      72,192      73,410
                                                             --------    --------    --------
     Total...............................................     106,308      96,563      92,397
Total individual life....................................     375,235     360,387     347,695
  Reinsurance assumed....................................       1,464       1,589       1,224
  Reinsurance ceded......................................     (40,740)    (17,571)    (14,224)
                                                             --------    --------    --------
Total individual life, net of reinsurance................    $335,959    $344,405    $334,695
                                                             ========    ========    ========
</TABLE>

     Traditional life insurance premiums collected were $268.9 million for 2000
compared to $263.8 million for 1999 and $255.3 million for 1998. First year and
single premium was relatively level between periods which was consistent with
the lower participating whole life sales, offset by the higher term sales, as
discussed previously. Renewal direct collected premium was $5.3 million higher
in 2000 as compared to 1999 and $6.7 million higher in 1999 as compared to 1998
primarily due to continued favorable persistency and the continued growth of the
block of business.

     Universal life insurance premiums collected were $106.3 million for 2000
compared to $96.6 million for 1999 and $92.4 million for 1998. The increase in
2000 and 1999 as compared to each prior year was primarily due to new products
introduced in mid-1999.

     Effective January 1, 2000, the Company entered into additional reinsurance
agreements which effectively reduced the Company's retention limit to $100,000
for the majority of policies issued since July 1, 1996 and for the majority of
new business going forward. In addition, effective July 1, 2000, the Company
entered into a reinsurance agreement covering its Closed Block policies. Under
this agreement, the Company has reinsured

                                        4
<PAGE>   7

approximately 90% of the Closed Block net amount at risk not previously
reinsured. As a result of these new agreements, reinsurance ceded was $23.1
million higher for 2000 as compared to 1999.

     The following table sets forth information regarding the Company's life
insurance in force for each date presented:

<TABLE>
<CAPTION>
                                                         INDIVIDUAL LIFE INSURANCE IN FORCE
                                                                 AS OF DECEMBER 31,
                                                      -----------------------------------------
                                                         2000           1999           1998
                                                      -----------    -----------    -----------
                                                                  ($ IN THOUSANDS)
<S>                                                   <C>            <C>            <C>
Traditional life
  Number of policies..............................        245,496        249,282        254,033
  GAAP life reserves..............................    $ 1,744,038    $ 1,645,945    $ 1,554,681
  Face amounts....................................    $23,485,000    $21,458,000    $19,559,000
Universal life
  Number of policies..............................        113,253        112,906        115,056
  GAAP life reserves..............................    $   956,584    $   920,010    $   897,159
  Face amounts....................................    $12,735,000    $12,244,000    $12,153,000
Total life insurance
  Number of policies..............................        358,749        362,188        369,089
  GAAP life reserves..............................    $ 2,700,622    $ 2,565,955    $ 2,451,840
  Face amounts....................................    $36,220,000    $33,702,000    $31,712,000
</TABLE>

DISTRIBUTION SYSTEMS

     The Company sells life insurance in 49 states, the District of Columbia and
the U.S. Virgin Islands. The states with the highest geographic concentration of
sales, based on statutory premiums, are California, Iowa, Minnesota, Texas and
Illinois. These states account for approximately 43% of the Company's statutory
premiums.

     The Company's target customers are individuals in the middle and upper
income brackets and small businesses. The Company markets its life insurance
products on a national basis primarily through a Preferred Producer agency
system and a Personal Producing General Agent (PPGA) distribution system. The
Company currently employs 14 regional vice presidents who are responsible for
supervising the Preferred Producer agencies and/or PPGA agents within their
assigned geographic regions.

     Under the Preferred Producer agency system, a contractual arrangement is
entered into with the Preferred Producer general agent for the sale of insurance
products by the Preferred Producer agents and brokers assigned to the Preferred
Producer general agent's agency. The Preferred Producer general agents are
primarily compensated by receiving a percentage of the first year commissions
paid to Preferred Producer agents and brokers in the Preferred Producer general
agent's agency and by renewal commissions on premiums subsequently collected on
that business. In addition, the Preferred Producers receive certain fringe
benefits and other allowances.

     The Preferred Producer general agents are independent contractors and are
generally responsible for the expenses of operating their agencies, including
office and overhead expenses and the recruiting, selection, contracting,
training and development of Preferred Producer agents and brokers in their
agency. Currently, the Company has 41 Preferred Producer general agents in 23
states, through which approximately 940 Preferred Producer agents sell the
Company's products. While Preferred Producer agents in the Preferred Producer
agency system are non-exclusive, most agents use the Company's products for a
majority of their new business for the type of products offered by the Company.
No single Preferred Producer general agency accounts for more than 4% of the
total first year life commissions paid by the Company.

     Preferred Producer agents are also independent contractors and are
primarily compensated by commissions on first year and renewal premiums
collected on business written by them plus certain fringe benefits and

                                        5
<PAGE>   8

other allowances. In addition, Preferred Producer agents can earn bonus
commissions, graded by production and persistency on their business.

     Under the PPGA system, the Company contracts primarily with individuals who
are experienced individual agents or head a small group of experienced
individual agents. These individuals are independent contractors and are
responsible for all of their own expenses. These individuals often sell products
for other insurance companies, and may offer selected products of the Company
rather than the Company's full line of insurance products. The PPGA system is
comprised of approximately 1,000 PPGA's, with approximately 1,400 agents.

     PPGAs are compensated by commissions on first year and renewal premiums
collected on business written by themselves and the agents in their units. In
addition to a base commission, PPGAs may earn bonus commissions on their
business, graded by production and persistency.

     The Company has also developed programs to sell life insurance through
select brokerages. The customers targeted and the products sold are similar to
those of the Preferred Producer agency system and the PPGA system, with an
emphasis on equity-linked universal life products.

     Under the brokerage distribution system, a contractual arrangement is
entered into with an independent brokerage general agent to promote the
Company's insurance products to their network of agents and brokers. The agent
receives a commission and the general agent receives an override commission on
the business produced. The Company currently has 17 brokerage general agents
under contract.

ANNUITY SEGMENT

PRODUCTS

     The Company's annuity premiums consisted of approximately 75% from fixed
annuity products, 8% from multi-choice annuity products, and 17% from
equity-index annuity products in 2000. The following table sets forth annuity
collected premiums for the periods indicated:

<TABLE>
<CAPTION>
                                                              COLLECTED PREMIUMS BY PRODUCT
                                                             FOR THE YEARS ENDED DECEMBER 31,
                                                            ----------------------------------
                                                               2000         1999        1998
                                                            ----------    --------    --------
                                                                     ($ IN THOUSANDS)
<S>                                                         <C>           <C>         <C>
Fixed annuities.........................................    $1,107,147    $834,636    $756,106
Multi-choice annuities..................................       115,309       1,600          --
Equity-index annuities..................................       259,194     102,665      36,418
                                                            ----------    --------    --------
  Total.................................................     1,481,650     938,901     792,524
Reinsurance assumed.....................................            --      59,561          --
Reinsurance ceded.......................................       (34,534)       (273)     (1,247)
                                                            ----------    --------    --------
Total annuities, net of reinsurance.....................    $1,447,116    $998,189    $791,277
                                                            ==========    ========    ========
</TABLE>

     Fixed Annuity Products.  The Company, through its subsidiaries, offers a
broad portfolio of fixed annuity products. Annuities provide for the payment of
periodic benefits over a specified time period. Benefits may commence
immediately or may be deferred to a future date. Fixed annuities generally are
backed by a general investment account and credited with a rate of return that
is periodically reset.

     The Company offers a variety of interest rate crediting strategies on its
fixed annuity products. These strategies include initial interest crediting
rates with guarantees for periods of one to five years. Following the initial
guarantee period, the Company may adjust the credited interest rate annually,
subject to the minimum interest rates specified in the contracts. Such minimum
guarantee rates currently range from 3% to 4.5%. The Company also offers an
interest rate crediting strategy that credits the policy with a return generally
based upon the interest rates it earns on assets supporting the respective
policies less management fees.

                                        6
<PAGE>   9

     Effective October 1, 2000, the Company entered into a reinsurance agreement
to cede 35% of certain fixed annuity production on a modified coinsurance basis.
Fixed annuity production ceded under this agreement totaled approximately $34.2
million in 2000.

     Multi-choice Annuities.  In December 1999, the Company introduced
multi-choice annuity products which provide for various earnings strategies
under one product, such as a long-term equity index, an annual equity index, an
investment grade bond index, and a guaranteed one-year rate. Earnings are
credited to these products based on the increases in the applicable indexes,
less management fees, and funds may be moved between investment alternatives.

     Equity-Index Annuities.  The Company offers equity-index annuity products
that are based on Standard & Poor's 500 Composite Stock Price Index(R). Earnings
credited to these products generally are linked to increases in the anniversary
date values of the applicable index, less management fees.

     In the third quarter of 1999, the Company entered into a reinsurance
agreement for the assumption of a block of equity-index annuities totaling $59.6
million from its joint venture partner, AVLIC. In conjunction with this
transaction, the Company now directly issues this equity-index product, which
contributed to the increased sales in 2000 and 1999. In addition, the Company
introduced a new equity-linked product in mid-1999 which had a positive impact
on sales.

     The following table sets forth information regarding annuities in force for
each date presented:

<TABLE>
<CAPTION>
                                                                   ANNUITIES IN FORCE
                                                                   AS OF DECEMBER 31,
                                                         --------------------------------------
                                                            2000          1999          1998
                                                         ----------    ----------    ----------
                                                                    ($ IN THOUSANDS)
<S>                                                      <C>           <C>           <C>
Deferred fixed and immediate annuities
  Number of policies.................................       161,087       169,854       179,294
  GAAP life reserves.................................    $5,956,929    $5,951,002    $5,975,320
Multi-choice annuities
  Number of policies.................................         2,487            22            --
  GAAP life reserves.................................    $  112,319    $    1,600    $       --
Equity-index annuities
  Number of policies.................................        14,939         9,807         5,040
  GAAP life reserves.................................    $  680,669    $  436,262    $  239,934
Total annuities
  Number of policies.................................       178,513       179,683       184,334
  GAAP life reserves.................................    $6,749,917    $6,388,864    $6,215,254
</TABLE>

DISTRIBUTION SYSTEMS

     The Company sells annuities in 49 states, the District of Columbia and the
U.S. Virgin Islands. The states with the highest geographic concentration of
sales, based on statutory premiums, are Iowa, California, Arizona, Florida and
Texas. These states account for approximately 43% of the Company's statutory
premiums.

     The Company directs its marketing efforts towards the asset accumulation,
conservative savings, and retirement markets. The Company markets its annuity
products on a national basis primarily through networks of independent agents.
The independent agents are supervised by regional vice presidents and regional
directors or Independent Marketing Organizations (IMOs). In addition, the
Preferred Producer Agency and PPGA systems discussed previously are utilized to
market select annuity products.

     The regional vice presidents and regional directors are primarily
responsible for recruiting agents and servicing those agents in an effort to
promote the Company's products. The regional vice presidents' and regional
directors' marketing support activities include informational mailings,
seminars, and case consultations, all of which are designed to educate agents
about annuities in general and the Company in particular. Regional vice
presidents and regional directors are paid a base salary plus incentive
compensation based on the
                                        7
<PAGE>   10

business produced by agents within their territory. There are currently four
regional vice presidents and regional directors covering the southeastern,
western, southwestern and midwestern regions of the United States.

     The Company's IMOs consist of approximately 76 contracted organizations and
three wholly-owned organizations. The IMOs are responsible for recruiting,
servicing and educating agents in an effort to promote the Company's products.
The IMOs receive an override commission based on the business produced by their
agents.

     The Company currently has approximately 10,400 independent agents licensed
to sell its annuity products. The Company also maintains contact with
approximately 54,000 agents that are not currently licensed, but have either
sold the Company's annuities in the past or have expressed an interest in doing
so. These agents continue to receive periodic mailings related to interest rate
and commission changes, and new product introductions, and are reappointed as
required in order to represent the Company in selling its products. However, in
order to save costs associated with reappointing agents, the Company does not
automatically relicense an agent that has not written business for twelve
months.

     No single agent accounted for more than 0.7% of the Company's annuity sales
in 2000. The Company does not have exclusive agency agreements with its agents
and management believes most of these agents sell products similar to those sold
by the Company for other insurance companies.

     The Company also sells annuities through a bank distribution system. The
customers targeted and the products sold are similar to those sold by the
independent agent networks. The Company has an 80% ownership interest in an
independent marketing organization that is associated with over 700 community
banks in the southeast region of the United States. Fixed annuity products are
the primary product focus of this organization.

     Under the bank distribution system, the Company contracts with banks and
marketing organizations for the sale of annuities by agents who are employees of
the banks. Commissions are paid to the banks. Currently, the Company has
approximately 79 banks and 16 marketing organizations under contract through
which approximately 440 agents sell the Company's products. The Company provides
training and servicing support to the banks and marketing organizations.

AMERITAS JOINT VENTURE

     The Company participates in a joint venture with Ameritas Life Insurance
Corp. (Ameritas) (Ameritas Joint Venture) through AmerUs' 34% ownership interest
in AMAL Corporation, a Nebraska corporation (AMAL). AMAL's operations are
conducted through Ameritas Variable Life Insurance Company (AVLIC) and Ameritas
Investment Corp., a registered broker-dealer (AIC), its two wholly-owned
subsidiaries, which have been in business since 1983. AVLIC is licensed to
conduct business in 47 states and the District of Columbia. AIC is a registered
broker-dealer which is licensed to conduct business in all states except New
York. AmerUs' partner in the Ameritas Joint Venture, Ameritas, is a Nebraska
mutual life insurance company which has been in existence for more than 100
years.

     The Company's investment in the Ameritas Joint Venture affords the Company
access to a line of existing variable life insurance and annuity products while
providing a lower-cost entry into an established business, thereby eliminating
significant start-up costs and allowing for immediate potential earnings.

     The Ameritas Joint Venture offers through AVLIC fixed annuity products,
flexible premium and single premium variable universal life insurance products
and variable annuities. Variable products provide for allocation of funds to a
general account or to one or more separate accounts under which the owner bears
the investment risk. Through AVLIC's fund managers, owners of variable annuities
and life insurance policies are able to choose from a range of investment funds
offered by each manager.

     Under the terms of the joint venture agreement, AmerUs and Ameritas write
their new single and flexible premium deferred fixed annuities and variable
annuities and variable life insurance through the Ameritas Joint Venture. AmerUs
has retained the right to offer equity-index annuity products directly and to
continue to

                                        8
<PAGE>   11

issue replacement business to its fixed annuity customers in existence prior to
the effective date of the joint venture agreement.

     The variable life insurance products and the fixed and variable annuities
offered by the Ameritas Joint Venture are distributed through the Company's
Preferred Producer general agency, PPGA, and Bank distribution systems, as well
as through the distribution systems of Ameritas and AVLIC.

     Under the terms of the joint venture agreement, AmerUs has an option to
purchase an additional 5% to 15% of AMAL if certain premium growth targets are
met. AmerUs met the premium growth target requirement for one 5% purchase option
in January 2001. The Company has notified Ameritas of its intention to exercise
the option. AmerUs and Ameritas each have guaranteed the policyholder
obligations of AVLIC. The guarantee of each party is joint and several, and will
remain in effect until certain conditions are met.

     As of December 31, 2000, AMAL had total consolidated assets of $2,644.5
million and total consolidated shareholder's equity of $96.9 million on a GAAP
basis. AVLIC had $6,207.4 million of insurance in force and $63.7 million in
surplus as of December 31, 2000, on a statutory basis.

COMPETITION

     The Company operates in a highly competitive industry. Numerous life
insurance companies and other entities, including banks and other financial
institutions, compete with the Company, many of which have greater financial and
other resources as compared to the Company. The Company believes that the
principal competitive factors in the sale of insurance products are product
features, price, commission structure, perceived stability of the insurer,
financial strength ratings, value-added service and name recognition. Many other
companies are capable of competing for sales in the Company's target markets
(including companies that do not presently compete in such markets). The
Company's ability to compete for sales is dependent upon its ability to address
the competitive factors described above.

     In addition to competing for sales, the Company competes for qualified
agents and brokers to distribute its products. Strong competition exists among
insurance companies for agents and brokers with demonstrated ability. Management
believes that the bases of competition for the services of such agents and
brokers are commission structure, support services, prior relationships and the
strength of an insurer's products. Although the Company believes that it has
good relationships with its agents and brokers, its ability to compete will
depend on its continued ability to attract and retain qualified persons.

     As of December 31, 2000, AmerUs' financial strength rating was: rated "A"
(Excellent) by A.M. Best Company; rated "Baa1" (Adequate) by Moody's Investors
Service; and rated "A" (Strong) by Standard & Poor's.

     Delta Life's financial strength rating was: rated "A" (Excellent) by A.M.
Best Company; rated "Baa1" (Adequate) by Moody's Investors Service; and rated
"BBB" (Good) by Standard & Poor's.

     American's financial strength rating was: rated "A-" (Excellent) by A.M.
Best Company; rated "Baa1" (Adequate) by Moody's Investors Service; and rated
"A" (Strong) by Standard & Poor's.

     Financial Benefit Life's financial strength rating was "B+" (Very Good) by
A.M. Best Company and "BBB" (Good) by Standard & Poor's.

INSURANCE UNDERWRITING

     The Company follows detailed, uniform underwriting practices and procedures
in its insurance business which are designed to assess risks before issuing
coverage to qualified applicants. The Company has professional underwriters who
evaluate policy applications on the basis of information provided by applicants
and others.

                                        9
<PAGE>   12

REINSURANCE

     In accordance with industry practices, the Company reinsures portions of
its life insurance and disability income exposure with unaffiliated insurance
companies under traditional indemnity reinsurance arrangements. Such reinsurance
arrangements are in accordance with standard reinsurance practices within the
industry. The Company enters into these arrangements to assist in diversifying
their risks and to limit the maximum loss on risks that exceed policy retention
limits. The Company's maximum retention limit for life insurance policies was
$1,000,000 per life insured. Effective January 1, 2000, the Company entered into
additional reinsurance agreements which effectively reduced the Company's
retention limit to $100,000 for the majority of policies issued since July 1,
1996 and for the majority of new business going forward. Effective July 1, 2000,
the Company entered into a reinsurance agreement covering its Closed Block
policies. Under this agreement the Company has reinsured approximately 90% of
the Closed Block net amount at risk not previously reinsured. Indemnity
reinsurance does not fully discharge the Company's obligation to pay claims on
business it reinsures. The Company, as the ceding company, remains responsible
for policy claims to the extent the reinsurer fails to pay such claims. The
Company annually monitors the creditworthiness of its primary reinsurers, and
has experienced no material reinsurance recoverability problems in recent years.

     As of December 31, 2000, the Company had reinsurance arrangements in place
for life insurance having a face amount of approximately $25.2 billion with 25
unaffiliated reinsurers. All but one of the companies with which the Company had
life reinsurance arrangements as of such date were rated "A" or better by A.M.
Best. As of December 31, 2000, the Company's top five reinsurers (by face amount
reinsured) constituted approximately 90% of the total face amount reinsured by
the Company as of such date. Of these top five reinsurers, four are rated "A+"
and the other one "A" by A.M. Best.

     Effective October 1, 2000, the Company entered into a reinsurance agreement
to cede 35% of certain fixed annuity production on a modified coinsurance basis.
The Company also reinsures 15% of its equity-index annuity reserves with an
unaffiliated reinsurer which is rated "A+" by A.M. Best and approximately 1% of
its deferred annuities with an unaffiliated company which is rated "A" by A.M.
Best.

EMPLOYEES

     As of December 31, 2000, the Company had 759 full-time employees. None of
these employees are covered by a collective bargaining agreement and the Company
believes that its relations with employees are satisfactory.

SUBSIDIARIES

     The Company has five primary wholly-owned subsidiaries: AmerUs, an Iowa
life insurance company; Delta Life Corporation (Delta), an Iowa corporation;
AmVestors Financial Corporation (AmVestors), a Kansas corporation, AmerUs
Capital Management Group, Inc. (ACM), an Iowa corporation; and AmerUs
Properties, Inc. (API), an Iowa corporation. AmerUs has two wholly-owned
subsidiaries: CLA Assurance Company, an Iowa life insurance company; and
American Vanguard Life Insurance Company, an Iowa life insurance company. In
addition, AmerUs currently owns a 34% interest in AMAL Corporation, through
whose wholly-owned subsidiaries the Ameritas Joint Venture operates. Delta
primarily has one wholly-owned subsidiary, Delta Life, an Iowa life insurance
company. AmVestors primarily has two wholly-owned subsidiaries: American, a
Kansas life insurance company; and Financial Benefit Life Insurance Company
(FBL), a Kansas life insurance company. ACM has one wholly-owned subsidiary, ACM
Properties, Inc., an Iowa corporation.

REGULATION

     As a holding company, the Company is subject to regulation by the states in
which its insurance subsidiaries are domiciled and/or transact business. State
insurance laws generally establish supervisory agencies with broad
administrative and supervisory powers related to granting and revoking licenses,
transacting business, establishing guaranty fund associations, licensing agents,
approving policy forms, regulating sales practices, regulating premium rates for
some lines of business, establishing reserve require-
                                        10
<PAGE>   13

ments, prescribing the form and content of required financial statements and
reports, determining the reasonableness and adequacy of statutory capital and
surplus, and regulating the type and amount of investments permitted.

     Every state in which the Company's insurance companies are licensed
administers a guaranty fund, which provides for assessments of licensed insurers
for the protection of policyowners of insolvent insurance companies. Assessments
can be partially recovered through a reduction in future premium taxes in some
states.

     Risk-based capital ("RBC") standards for life insurance companies were
adopted by the National Association of Insurance Commissioners ("NAIC") in 1992
and require insurance companies to calculate and report for statutory basis
financial statements information under a risk-based capital formula. The formula
is embodied in the NAIC Model Act, which has been adopted by many states,
including Iowa and Kansas. RBC requirements are intended to allow insurance
regulators to identify at an early stage inadequately capitalized insurance
companies based upon the types and mixtures of risks inherent in such companies'
operations. The formula includes components for asset risk, liability risk,
interest rate exposure and other factors. As of December 31, 2000, AmerUs',
Delta Life's, American's and FBL's RBC levels were 540%, 472%, 531% and 495%,
respectively, of each of their respective authorized control level RBC
thresholds.

     Although the federal government generally does not directly regulate the
insurance business, federal initiatives often have an impact on the business in
a variety of ways. Current and proposed federal measures that may significantly
affect the insurance business include limitations on antitrust immunity, minimum
solvency requirements and the recent removal of barriers restricting banks from
engaging in the insurance and mutual fund business.

ITEM 2.  PROPERTIES

     The Company leases approximately 69,000 square feet at 699 Walnut Street,
Des Moines, Iowa from an unaffiliated party. The Company's executive offices and
corporate operations, including legal, tax, finance, human resources,
investments, communications and technology, are at this location.

     The Company also leases approximately 103,000 square feet at 611 Fifth
Avenue, Des Moines, Iowa from an unaffiliated party. The life insurance segment
and the annuity segment occupy approximately 70,000 square feet and 10,000
square feet, respectively, of this space. The remaining space is primarily
utilized for technology and cafeteria facilities.

     The Company owns a 105,000 square foot office building in Topeka, Kansas.
The annuity segment occupies approximately 60,000 square feet of this facility
and the remaining space is leased to third parties.

     The Company also leases approximately 48,000 square feet from unaffiliated
parties for special technology projects, such as administration system
conversions, and for records and supply storage.

ITEM 3.  LEGAL PROCEEDINGS

     None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

                                        11
<PAGE>   14

                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND
         RELATED STOCKHOLDER MATTERS

     On September 20, 2000, the Company converted from a mutual insurance
holding company owned by the policyholders of AmerUs (the Members) to a stock
company 100% owned by its stockholders (the Demutualization). In connection with
the Demutualization, the Members received cash and policy credits equal to
approximately $340 million and 17,390,165 shares of common stock of the Company
(Company Stock). The Company Stock issued to Members, in exchange for their
ownership interests in the Company, was exempt from registration under Section
3(a)(10) of the Securities Act of 1933 (the Exemption). The Company based its
reliance on the Exemption on a No Action Letter filed with the Securities and
Exchange Commission (the Commission) on April 7, 2000 and the Commission's
response thereto received by the Company on May 23, 2000. In addition, the
Company issued 12,614,579 shares of its common stock in exchange for the shares
of ALHI held by the public. Please refer to "Item 1. Business -- Reorganization"
for a complete discussion.

     The Company's common stock is listed and traded on the New York Stock
Exchange (NYSE) under the symbol "AMH." The following table sets forth, for the
periods indicated, the high and low sales prices per share of AmerUs common
stock as quoted on the NYSE and the dividends per share declared during such
quarter.

<TABLE>
<CAPTION>
                                                                     AMERUS COMMON STOCK
                                                              ---------------------------------
                                                                HIGH        LOW       DIVIDENDS
                                                              --------    --------    ---------
<S>                                                           <C>         <C>         <C>
1999
First Quarter*..............................................  $24.6875    $16.8125      $0.10
Second Quarter*.............................................  $28.0000    $21.3125      $0.10
Third Quarter*..............................................  $28.7500    $21.1875      $0.10
Fourth Quarter*.............................................  $25.7500    $20.5000      $0.10
2000
First Quarter*..............................................  $24.0000    $16.5625      $0.10
Second Quarter*.............................................  $22.4375    $18.0000      $0.00
Third Quarter...............................................  $26.2500    $21.4375      $0.00
Fourth Quarter..............................................  $32.3750    $24.4375      $0.40
</TABLE>

---------------
* Information is that of ALHI, predecessor to AmerUs Group Co.

HOLDERS

     As of March 1, 2001, the number of holders of record of each class of
common equity of the Company was as follows:

<TABLE>
<CAPTION>
                                                              NUMBER OF
                                                               HOLDERS
                                                              ---------
<S>                                                           <C>
Common stock................................................   71,190
</TABLE>

DIVIDENDS

     ALHI's Board of Directors had declared and paid a quarterly dividend of
$0.10 per share of common stock, from the second quarter of 1997 through the
first quarter of 2000. The Company's Board of Directors approved moving from a
quarterly dividend of $0.10 per share of common stock to an annual dividend of
$0.40 per share of common stock beginning in 2000. The declaration and payment
of dividends in the future is subject to the discretion of the Company's Board
of Directors and will be dependent upon the Company's financial condition,
results of operations, cash requirements, future prospects, regulatory
restrictions on the

                                        12
<PAGE>   15

payment of dividends by the Company's life insurance subsidiaries and other
factors deemed relevant by the Company's Board of Directors.

     Under its bank credit facility, the Company is prohibited from paying
dividends on its common stock in excess of an amount equal to 3% of the
Company's consolidated net worth as of the last day of the preceding fiscal
year.

     In connection with the 8.85% Capital Securities, Series A (the "Capital
Securities"), issued in 1997 by AmerUs Capital I, the Company's subsidiary
trust, and the 7.00% Adjustable Conversion-rate Equity Security Units (ACES),
issued in 1998 by AmerUs Capital II, the Company's subsidiary trust, the Company
has agreed not to declare or pay any dividends on the Company's capital stock
(including the common stock) during any period for which the Company elects to
extend interest payments on its junior subordinated debentures, except for stock
dividends paid by the Company where the dividend stock is the same stock as that
on which the dividend is being paid. Dividends on the Company's capital stock
cannot be paid until all accrued interest on the Capital Securities and ACES has
been paid.

     The Company is a holding company whose principal assets consist of all of
the outstanding shares of the common stock of its life insurance subsidiaries.
The Company's ongoing ability to pay dividends to its shareholders and meet its
other obligations, including operating expenses and any debt service, primarily
depends upon the receipt of sufficient funds from its life insurance
subsidiaries in the form of dividends, interest payments or loans.

     Based on statutory insurance regulations and 1999 results, the Company's
insurance subsidiaries could have paid an estimated $61.1 million in dividends
in 2000 without obtaining regulatory approval. Of this amount, the Company's
subsidiaries paid the Company $42 million in dividends in 2000. Based on 2000
results, the Company's subsidiaries can pay an estimated $92.7 million in
dividends in 2001 without obtaining regulatory approval.

ITEM 6.  SELECTED FINANCIAL DATA

     The following table sets forth certain financial and operating data of the
Company. The selected consolidated financial data below for each of the five
years ending December 31, 2000 are derived from the Consolidated Financial
Statements of the Company, which financial statements have been audited by KPMG
LLP, independent auditors.

                                        13
<PAGE>   16

<TABLE>
<CAPTION>
                                                AS OF OR FOR THE YEAR ENDED DECEMBER 31,
                                        ---------------------------------------------------------
                                          2000        1999        1998      1997 (A)    1996 (B)
                                        ---------   ---------   ---------   ---------   ---------
                                            (DOLLARS IN MILLIONS, EXCEPT FOR PER SHARE DATA)
<S>                                     <C>         <C>         <C>         <C>         <C>
CONSOLIDATED INCOME STATEMENT DATA:
Revenues:
  Insurance premiums..................  $    88.9   $    89.5   $    81.2   $    48.1   $   138.5
  Product charges.....................       87.5        78.3        74.0        47.3        52.2
  Net investment income...............      586.6       557.3       514.1       228.7       233.4
  Realized gains (losses) on
     investments......................       (8.6)       (2.1)        0.7        11.9        64.5
  Other income........................       34.5        20.3        15.5        18.3        16.7
  Contribution from the Closed Block
     (B)..............................       24.5        25.2        31.5        31.0        19.9
                                        ---------   ---------   ---------   ---------   ---------
Total revenues........................      813.4       768.5       717.0       385.3       525.2
                                        ---------   ---------   ---------   ---------   ---------
Benefits and expenses:
  Policyowner benefits................      451.2       446.1       431.8       196.0       264.7
  Total insurance and other
     expenses.........................      211.2       191.2       162.3        95.8       109.0
  Dividends to policyowners...........        6.0         4.5         2.6         1.6        26.3
                                        ---------   ---------   ---------   ---------   ---------
Total benefits and expenses...........      668.4       641.8       596.7       293.4       400.0
                                        ---------   ---------   ---------   ---------   ---------
Income from continuing operations.....      145.0       126.7       120.3        91.9       125.2
Interest expense......................       29.7        29.0        27.9        16.9         8.7
                                        ---------   ---------   ---------   ---------   ---------
Income before tax expense and minority
  interest............................      115.3        97.7        92.4        75.0       116.5
Income tax expense....................       42.5        33.7        29.1        19.3        42.2
Minority interest.....................       21.7        28.1        26.9        16.2          --
                                        ---------   ---------   ---------   ---------   ---------
Net income from continuing
  operations..........................       51.1        35.9        36.4        39.5        74.3
Discontinued operations (net of tax):
  Income (loss) from discontinued
     operations.......................        0.7         2.5        (7.8)       14.9         7.0
  Gain on sale of discontinued
     operations.......................         --          --        74.9          --          --
                                        ---------   ---------   ---------   ---------   ---------
Net Income............................  $    51.8   $    38.4   $   103.5   $    54.4   $    81.3
                                        =========   =========   =========   =========   =========
Net income from continuing operations
  per share (C):
  Basic...............................  $    2.44   $    2.07   $    2.10   $    2.32   $    3.81
  Diluted.............................  $    2.43   $    2.06   $    2.07   $    2.32   $    3.81
Weighted average number of shares
  outstanding (in millions) (C):
  Basic...............................       20.9        17.4        17.4        17.0        19.5
  Diluted.............................       21.0        17.5        17.6        17.0        19.5
Dividends declared per common share
  (D).................................  $    0.40   $      --   $      --   $      --   $      --
CONSOLIDATED BALANCE SHEET DATA:
  Total invested assets...............  $ 8,211.2   $ 7,783.4   $ 7,855.7   $ 7,820.0   $ 3,308.1
  Total assets........................  $11,471.5   $11,097.7   $10,780.5   $12,004.6   $ 6,052.8
  Total liabilities...................  $10,439.8   $ 9,829.5   $ 9,399.5   $10,735.0   $ 5,378.5
  Minority interest...................  $      --   $   309.1   $   364.3   $   460.5   $      --
  Company-obligated mandatorily
     redeemable preferred
     securities.......................  $   197.7   $   197.7   $   199.6   $    86.0   $      --
  Total stockholders' equity..........  $   834.0   $   761.4   $   817.1   $   723.1   $   674.3
OTHER OPERATING DATA:
Adjusted net operating income (E).....  $    62.3   $    49.1   $    39.3   $    33.0   $    37.7
Adjusted net operating income per
  common share:
  Basic (F)...........................  $    2.98   $    2.82   $    2.26   $    1.94   $    1.93
  Diluted (F).........................  $    2.96   $    2.81   $    2.23   $    1.94   $    1.93
</TABLE>

---------------
(A) Consolidated Income Statement Data for 1997 includes the results for Delta,
    subsequent to the acquisition date of October 23, 1997 and the results for
    AmVestors, subsequent to the acquisition date of

                                        14
<PAGE>   17

    December 19, 1997, and Consolidated Balance Sheet Data includes year-end
    data for Delta and AmVestors.

(B) The Company formed the Closed Block on June 30, 1996. Invested assets
    allocated to the Closed Block are classified as Closed Block assets.
    Revenues and expenses associated with the Closed Block are shown net as a
    single line item. Accordingly, the individual income statement components
    for 2000, 1999 and 1998 are not fully comparable with those of 1996 due to
    the establishment of the Closed Block on June 30, 1996.

(C) The Company was formed in 1996 as a mutual holding company and therefore,
    had no shares of common stock outstanding until its demutualization on
    September 20, 2000. At that time, the Company distributed 17.4 million
    shares of its common stock to its former members and exchanged its common
    stock for the 12.9 million shares of common stock held by the public in ALHI
    on a one-for-one basis. The Company's income primarily reflects the results
    of its former subsidiary, ALHI. Therefore, net income from continuing
    operations per share has been calculated based on the number of shares of
    stock the Company owned of ALHI from January 1, 1996 through September 20,
    2000. Thereafter, net income from continuing operations per share has been
    calculated based on the 30.3 million shares actually outstanding.

(D) The Company did not have common stock until its demutualization on September
    20, 2000, therefore, there were no dividends to declare on common stock for
    the years 1996 through 1999. ALHI, the predecessor to the Company, did
    declare dividends on its common stock of $0.40 per share, $0.40 per share,
    and $0.30 per share for the years ended December 31, 1999, 1998 and 1997,
    respectively.

(E) Adjusted net operating income reflects net income adjusted to eliminate
    certain items (net of applicable income taxes and minority interest) which
    management believes are not necessarily indicative of overall operating
    trends, including net realized gains or losses on investments. Different
    items are likely to occur in each period presented and others may have
    different opinions as to which items may warrant adjustment. The adjusted
    net operating income shown does not constitute net income computed in
    accordance with GAAP.

(F) Basic and diluted adjusted net operating income per common share is
    calculated using the weighted average number of shares as shown in the table
    and discussed in (C) above.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
         FINANCIAL CONDITION

     The following analysis of the consolidated results of operations and
financial condition of the Company should be read in conjunction with the
Selected Consolidated Financial and Operating Data and Consolidated Financial
Statements and related notes.

OVERVIEW

     The Company is a holding company engaged through its subsidiaries in the
business of marketing, underwriting and distributing a broad range of individual
life insurance and annuity products to individuals and businesses in 49 states,
the District of Columbia and the U.S. Virgin Islands. The Company has two
reportable operating segments: Life Insurance and Annuities. The Life Insurance
segment's primary product offerings consist of whole life, universal life and
term life insurance policies. The primary product offerings of the Annuity
segment are fixed annuities.

     In accordance with Generally Accepted Accounting Principals (GAAP),
universal life insurance premiums and annuity deposits received are reflected as
increases in liabilities for policyowner account balances and not as revenues.
Revenues reported for universal life and annuity products consist of policy
charges for the cost of insurance, administration charges and surrender charges
assessed against policyowner account balances. Surrender benefits paid relating
to universal life insurance policies and annuity products are reflected as
decreases in liabilities for policyowner account balances and not as expenses.
Amounts for interest credited to universal life and annuity policyowner account
balances and benefit claims in excess of policyowner account balances are
reported as expenses in the financial statements. The Company receives
investment

                                        15
<PAGE>   18

income earned from the funds deposited into account balances by universal life
and annuity policyowners, the majority of which is passed through to such
policyowners in the form of interest credited.

     Premium revenues reported for traditional life insurance products are
recognized as revenues when due. Future policy benefits and policy acquisition
costs are recognized as expenses over the life of the policy by means of a
provision for future policy benefits and amortization of deferred policy
acquisition costs.

     The costs related to acquiring new business, including certain costs of
issuing policies and certain other variable selling expenses (principally
commissions), defined as policy acquisition costs, are deferred. The method of
amortizing deferred policy acquisition costs for life insurance products varies;
dependent upon whether the contract is participating or non-participating.
Participating contracts are those which are expected to pay dividends to
policyowners in proportion to their relative contribution to the Company's
statutory surplus. Non-participating life insurance deferred policy acquisition
costs are amortized over the premium-paying period of the related policies in
proportion to the ratio of annual premium revenues to total anticipated premium
revenues using assumptions consistent with those used in computing policy
benefit reserves. Deferred policy acquisition costs for participating policies
are amortized as an expense primarily in proportion to expected profits or
margins from such policies. This amortization is adjusted when current or
estimated future gross profits or margins on the underlying policies vary from
previous estimates. For example, the amortization of deferred policy acquisition
costs is accelerated when policy terminations are higher than originally
estimated or when investments supporting the policies are sold at a gain prior
to their anticipated maturity. Death and other policyowner benefits reflect
exposure to mortality risk and fluctuate from period to period based on the
level of claims incurred within insurance retention limits. The profitability of
the Company is primarily affected by expense levels, interest spread results
(i.e., the excess of investment earnings over the interest credited to
policyowners) and fluctuations in mortality, persistency and other policyowner
benefits. The Company has the ability to mitigate adverse experience through
adjustments to credited interest rates, policyowner dividends or cost of
insurance charges.

ADJUSTED NET OPERATING INCOME

     The following table reflects net income adjusted to eliminate certain items
(net of applicable income taxes and minority interest) which management believes
do not necessarily indicate overall operating trends. For example, net realized
capital gains or losses on investments, excluding gains or losses on convertible
preferred stock and bonds which are considered core earnings, are eliminated.
Net realized capital gains or losses on investments may be realized at the sole
discretion of management and are often realized in accordance with tax planning
strategies. Therefore, net realized capital gains or losses do not reflect the
Company's ongoing earnings capacity. Different items are likely to occur in each
period presented and others may have different opinions as to which items may
warrant adjustment. Adjusted net operating income is the basis used by the
Company in assessing its overall performance. Adjusted net operating income as
described here may not be comparable to similarly titled measures reported by
other companies. The adjusted net operating income shown below does not
constitute net income computed in accordance with GAAP.

     The adjusted net operating income for the Company is not comparable to the
adjusted net operating income of ALHI, the Company's predecessor, which was the
reporting Company in prior Securities and Exchange Commission filings. The
principal difference is the reduction of the Company's adjusted net operating
income due to the minority interests' equity in earnings through September 20,
2000. The minority interests' equity in earnings was $21.7 million, $28.1
million, $26.9 million, $16.2 million, and none for the years ended December 31,
2000 through December 31, 1996, respectively.

                                        16
<PAGE>   19

<TABLE>
<CAPTION>
                                                   FOR THE YEARS ENDED DECEMBER 31,
                                  -------------------------------------------------------------------
                                     2000          1999          1998          1997          1996
                                  -----------   -----------   -----------   -----------   -----------
                                                ($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                               <C>           <C>           <C>           <C>           <C>
Net Income......................      $51,840       $38,436      $103,499       $54,434       $81,285
Net non-core realized (gains)
  losses (A)....................        5,153         6,030         2,946        (6,791)      (43,221)
Net amortization of deferred
  policy acquisition costs due
  to non-core realized gains or
  losses (B)....................       (4,028)          805           (74)          305           669
Reorganization costs (C)........       10,063         6,322            --            --         1,522
Discontinued operations (D).....         (717)       (2,504)      (67,053)      (14,923)       (7,048)
Equity add-on tax (E)...........           --            --            --            --         4,480
                                  -----------   -----------   -----------   -----------   -----------
Adjusted Net Operating Income...      $62,311       $49,089       $39,318       $33,025       $37,687
                                  ===========   ===========   ===========   ===========   ===========
Adjusted Net Operating Income
  per common share (F):
  Basic.........................      $  2.98       $  2.82       $  2.26       $  1.94       $  1.93
                                  ===========   ===========   ===========   ===========   ===========
  Diluted.......................      $  2.96       $  2.81       $  2.23       $  1.94       $  1.93
                                  ===========   ===========   ===========   ===========   ===========
Weighted average common shares
  outstanding (F):
  Basic.........................   20,922,371    17,390,165    17,372,136    16,983,071    19,500,000
                                  ===========   ===========   ===========   ===========   ===========
  Diluted.......................   21,035,518    17,467,132    17,609,748    17,018,664    19,500,000
                                  ===========   ===========   ===========   ===========   ===========
</TABLE>

---------------
(A) Represents total realized gains or losses on investments less core realized
    gains or losses (defined as gains or losses on the convertible preferred
    stock and bond portfolio) adjusted for income taxes and minority interest on
    such amounts. Non-core realized gains or losses may vary widely between
    periods. Such amounts are determined by management's timing of individual
    transactions and do not necessarily correspond to the underlying operating
    trends.

(B) Represents amortization of deferred policy acquisition costs on the non-core
    realized gains or losses that are included in product margins, adjusted for
    income taxes and minority interest on such amounts.

(C) Represents costs directly related to the Company's reorganization and merger
    with ALHI, adjusted for minority interest on such amounts. These costs
    consist primarily of legal, actuarial and consulting expenses.

(D) Represents the net income from the Company's discontinued operations.

(E) Represents the mutual life insurance company equity add-on tax, which is
    applicable only to mutual life insurance companies and which is not
    applicable to the Company after June 30, 1996, due to AmerUs' conversion
    into a stock company.

(F) The Company was formed in 1996 as a mutual holding company and therefore,
    had no shares of common stock outstanding until its demutualization on
    September 20, 2000. At that time, the Company distributed 17.4 million
    shares of its common stock to its former members and exchanged its common
    stock for the 12.9 million shares of common stock held by the public in ALHI
    on a one-for-one basis. The Company's operating income primarily reflects
    the operating income of its former subsidiary, ALHI. Therefore, adjusted net
    operating income per share has been calculated based on the number of shares
    of stock the Company owned of ALHI from January 1, 1996 through September
    20, 2000. Thereafter, adjusted net operating income per share has been
    calculated based on the 30.3 million shares actually outstanding.

                                        17
<PAGE>   20

     Adjusted net operating income increased $13.2 million to $62.3 million, or
$2.96 per diluted share, for 2000 compared to $49.1 million, or $2.81 per
diluted share, for 1999 and $39.3 million, or $2.23 per diluted share, for 1998.
The increase in adjusted net operating income in 2000 was primarily attributable
to the reduction in income applicable to the minority interest and the growth in
invested assets. The increase in 1999 adjusted operating income as compared to
1998 primarily resulted from increased spreads and increased investment income
from the proceeds received on the sale of the residential real estate and bank
operating segments in mid-1998. These changes are analyzed further in the
operating segment discussion.

     Adjusted net operating income for 2000 included the following items: $7.3
million of after-tax earnings on the cash balances which were distributed to the
former Members in connection with the demutualization of the Company,
non-recurring costs of $1.5 million, after-tax, related to the former mutual
holding company and a $1.6 million reduction due to the Company's equity
investment in the downstream holding company of ILICO (ILICO Investment). The
loss on this equity investment occurred in the third quarter of 2000, and was
one of the factors in the Company's reduction in the number of shares that will
be issued in connection with the ILICO combination discussed previously.

     In the fourth quarter of 2000, the ILICO investment performed at a level
similar to the other investments in the Company's investment portfolio. This
level of performance is expected to continue into the future. However, future
adjusted net operating income will no longer contain the investment earnings on
the cash distribution the Company made to its Members in late October in
connection with the Company's demutualization. Adjusting for these factors and
the non-recurring costs would have had the effect of reducing 2000 adjusted net
operating income to $58.1 million, or $2.76 per diluted share, as shown in the
following table:

<TABLE>
<CAPTION>
                                                                   FOR THE YEAR ENDED
                                                                   DECEMBER 31, 2000
                                                              ----------------------------
                                                                DOLLAR        PER SHARE
                                                               AMOUNTS         AMOUNTS
                                                              ----------    --------------
                                                              ($ IN THOUSANDS, EXCEPT PER
                                                                      SHARE DATA)
<S>                                                           <C>           <C>
Adjusted Net Operating Income...............................   $62,311            $ 2.96
After tax earnings on cash balances distributed in
  connection with the demutualization of the Company........    (7,338)            (0.35)
After-tax non-recurring mutual holding company costs........     1,515              0.07
Reduction due to equity investment in IL Group not
  performing at the Company's investment expectations, net
  of minority interest and taxes............................     1,635              0.08
                                                               -------       -----------
                                                               $58,123            $ 2.76
                                                               =======       ===========
Weighted average number of diluted shares outstanding.......                  21,035,518
</TABLE>

THE CLOSED BLOCK

     The Closed Block was established on June 30, 1996 in connection with the
reorganization of AmerUs to a stock form. Insurance policies which had a
dividend scale in effect as of June 30, 1996, 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 AmerUs,
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. The contribution to the operating income of the Company
from the Closed Block is reported as a single line item in the income statement.
Accordingly, premiums, product charges, investment income, realized gains and
losses on investments, policyowner benefits and dividends attributable to the
Closed Block, less certain minor expenses including amortization of deferred
policy acquisition costs, are shown as a net number under the caption
"Contribution from the Closed Block". This results in material reductions in the
respective line items in the income statement while having no effect on net
income. The expenses associated with the administration of the policies included
in the Closed Block and the renewal commissions on these policies are not
charged against the Contribution from the Closed Block, but rather are grouped
with underwriting, acquisition and other expenses. Also, all assets allocated to
the Closed Block are grouped

                                        18
<PAGE>   21

together and shown as a separate item titled "Closed Block Assets". Likewise,
all liabilities attributable to the Closed Block are combined and disclosed as
the "Closed Block Liabilities".

OPERATING SEGMENTS

     The Company has two reportable operating segments: Life Insurance and
Annuities. Products generally distinguish a segment. The Company uses the same
accounting policies and procedures to measure operating segment income as it
uses to measure its consolidated income from operations with the exception of
the elimination of certain items which management believes are not necessarily
indicative of overall operating trends. These items are explained further in the
Adjusted Net Operating Income section of Management's Discussion and Analysis of
Results of Operations and Financial Condition. Revenues and benefits and
expenses are primarily attributed directly to each operating segment. Net
investment income and core realized gains and losses on investments are
allocated based on the directly-related asset portfolios. Other revenues and
expenses which are deemed not to be associated with any specific reportable
segment are grouped together in the All Other category. These items primarily
consist of holding company revenues and expenses and the operations of the
companies' real estate management subsidiary. The Company assesses the
performance of its operating segments before interest expense, income taxes, and
minority interest. Income from operations and operating segment information do
not include discontinued operations which are comprised of the former banking,
residential real estate brokerage, residential land development, and mortgage
banking activities of the Company.

RESULTS OF OPERATIONS

     A summary of the Company's revenue follows:

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2000        1999        1998
                                                             --------    --------    --------
                                                                     ($ IN THOUSANDS)
<S>                                                          <C>         <C>         <C>
Insurance premiums
  Life insurance -- traditional..........................    $ 66,807    $ 64,263    $ 51,261
  Annuities -- Immediate annuity & supplementary contract
     premiums............................................      21,820      25,122      29,610
  All other..............................................         230         136         326
                                                             --------    --------    --------
  Total insurance premiums...............................      88,857      89,521      81,197
Product charges
  Life insurance -- universal life.......................      52,641      50,499      47,225
  Annuities..............................................      34,814      27,835      26,757
                                                             --------    --------    --------
  Total product charges..................................      87,455      78,334      73,982
Net investment income
  Life insurance.........................................      99,194      94,400      72,684
  Annuities..............................................     468,404     443,359     433,221
  All other..............................................      19,021      19,521       8,202
                                                             --------    --------    --------
  Total net investment income............................     586,619     557,280     514,107
Realized gains (losses) on investments
  Annuities -- core......................................       3,063      10,166       9,400
  All other -- non-core..................................     (11,683)    (12,261)     (8,623)
                                                             --------    --------    --------
  Total realized gains (losses) on investments...........      (8,620)     (2,095)        777
Other income
  Annuities..............................................      21,787       6,304       1,971
  All other..............................................      12,788      13,987      13,511
                                                             --------    --------    --------
  Total other income.....................................      34,575      20,291      15,482
Contribution from the Closed Block.......................      24,503      25,166      31,478
                                                             --------    --------    --------
  Total revenues.........................................    $813,389    $768,497    $717,023
                                                             ========    ========    ========
</TABLE>

                                        19
<PAGE>   22

     Traditional life insurance premiums were $66.8 million in 2000 compared to
$64.3 million in 1999 and $51.3 million in 1998. The increases in traditional
life insurance premiums in 2000 and 1999 were primarily the result of increased
first year and renewal premium, partially offset by increased ceded premium in
2000. First year and renewal premium increased approximately $13.8 million in
2000 and $13.0 million in 1999 primarily due to continued favorable persistency
and the continued growth of the block of business. The increase in ceded premium
in 2000 was due to the reinsurance agreements the Company entered into effective
January 1, 2000 which effectively reduced the Company's retention limit to
$100,000 for the majority of new business. Approximately $11.1 million of
additional premiums were ceded to reinsurers in 2000 as compared to 1999,
offsetting the increased renewal premiums in that year.

     Immediate annuity and supplementary contract premiums decreased by $3.3
million to $21.8 million in 2000 compared to $25.1 million in 1999 and $29.6
million in 1998. A decrease in immediate annuity premiums was anticipated as a
result of pricing adjustments made on these products.

     Universal life product charges were $52.6 million in 2000 compared to $50.5
million in 1999 and $47.2 million in 1998. The increase in product charges each
year were primarily due to increased cost of insurance charges as a result of
the normal aging and growth of the block of business, partially offset by higher
reinsurance costs.

     Annuity product charges were $34.8 million in 2000 compared to $27.8
million in 1999 and $26.8 million in 1998. The increases in product charges each
year were primarily due to increased surrender and expense charges resulting
from the larger annuity block of business in force and increased surrender
charges associated with an increase in withdrawals. Annuity withdrawal rates
averaged 16.8% for 2000 compared to 14.7% for 1999 and 14.6% for 1998.
Approximately three-fourths of the increase in withdrawal rates in 2000 was due
to internal replacements as some of the surrendered policies were converted to
other Company products. Based on the current environment, withdrawal rates for
the near term are expected to run at levels comparable to those experienced in
2000.

     Total net investment income was $586.6 million in 2000 compared to $557.3
million in 1999 and $514.1 million in 1998. The increases in 2000 and 1999 net
investment income were primarily attributable to higher average invested assets
(excluding market value adjustments) and higher effective yields as compared to
prior years. Average invested assets (excluding market value adjustments)
increased approximately $427.1 million in 2000 compared to 1999 and
approximately $363.4 million in 1999 compared to 1998. The increases were
primarily due to the growth of the Company's life insurance and annuity
businesses, increased holding company cash equivalents and the addition of a
structured asset-backed commercial paper vehicle. The cash equivalents were
generated primarily from the sale of the Company's discontinued operations in
mid-1998. These funds were invested as the Company awaited distribution of the
funds to its former Members in connection with its reorganization discussed
previously. In late October 2000, the Company distributed approximately $340
million of cash to its former Members. The earnings on the cash on hand
distributed totaled approximately $11.3 million and $11.9 million in 2000 and
1999, respectively. As a result of this distribution, future earnings of the
Company will no longer contain the net investment income from this source.

     The effective yield of the entire portfolio in 2000 was 6.92% compared to
6.91% in 1999 and 6.69% in 1998. The 2000 yield was depressed due to a loss on
the Company's equity investment in the downstream holding company of ILICO in
the third quarter. This loss reduced net investment income by approximately $3.3
million from normal levels. Adjusting the portfolio yields for this loss, the
2000 yield would have been 6.95%. As stated earlier, the loss on this equity
investment was one of the factors in the Company's reduction in the number of
shares to be issued in the ILICO combination. Approximately 42% of the book
value of the assets of ALHI were adjusted to market value at the end of the
third quarter of 2000 in connection with the Company's reorganization, as
discussed previously. The market value adjustment improved investment yields
approximately 20 basis points for the fourth quarter and 6 basis points for the
year. Yields in 1998 were impacted by a decline in value on hedge funds and
long-term private partnership investments resulting in lower net investment
income in both the life insurance and annuity segments in that year. The
effective yield on the deferred annuity portfolio increased 30 basis points to
6.98% for 2000 as compared to 6.68% for 1999.

                                        20
<PAGE>   23

The deferred annuity portfolio yield in 2000 was also positively impacted by the
market value adjustment and by higher reinvestment rates near the end of 1999
and continuing into the first part of 2000 as compared to the portfolio rates at
the beginning of the prior year period. The effective yield of the deferred
annuity portion of the portfolio decreased 10 basis points to 6.68% in 1999 as
compared to 6.78% in 1998. The decrease in the 1999 effective yield primarily
resulted from lower reinvestment rates throughout 1998 and the majority of 1999
compared to the portfolio rate at the beginning of the prior year period.

     Realized losses on investments were $8.6 million in 2000 and $2.1 million
in 1999 compared to realized gains of $0.7 million in 1998. The level of
realized gains and losses will fluctuate from period to period depending on the
prevailing interest rate and economic environment and the timing of the sale of
investments.

     Other income primarily consists of real estate operating income, property
management fees, structured finance fees from affordable housing programs,
Corporate Owned Life Insurance (COLI) income, and third party annuity
commissions received by wholly-owned IMOs. Other income increased approximately
$14.3 million in 2000 to $34.6 million as compared to $20.3 million in 1999 and
$15.5 million in 1998. Approximately $14.2 million of the 2000 increase in
annuity other income was due to the acquisition of another IMO in February, 2000
and the remainder reflects two months of income on a $100 million COLI
investment the Company made in the fourth quarter of 2000. COLI is classified as
an other asset and accordingly the income from this asset appears in other
income instead of net investment income. The increase in 1999 annuity other
income is primarily due to the acquisition of an IMO in mid-1998 whereby 1999
reflects a full 12 months of income from this IMO compared to only five months
of IMO income in 1998.

     The Contribution from the Closed Block was $24.5 million in 2000 compared
to $25.2 million in 1999 and $31.5 million in 1998. The following table sets
forth the operating results of the Closed Block for the periods indicated:

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2000        1999        1998
                                                             --------    --------    --------
                                                                     ($ IN THOUSANDS)
<S>                                                          <C>         <C>         <C>
Revenues
  Insurance premiums.....................................    $185,350    $189,444    $198,178
  Universal life and annuity product charges.............      12,485      12,463      13,695
  Net investment income..................................     112,906     108,117     115,762
  Realized gains (losses) on investments.................        (695)       (380)     10,324
                                                             --------    --------    --------
     Total revenues......................................     310,046     309,644     337,959
Benefits and expenses
  Policyowner benefits...................................     200,850     193,482     200,783
  Underwriting, acquisition and insurance expenses.......       1,415       4,408       5,042
  Amortization of deferred policy acquisition costs and
     value of business acquired (VOBA)...................      14,954      20,337      26,286
  Dividends to policyowners..............................      68,324      66,251      74,370
                                                             --------    --------    --------
     Total benefits and expenses.........................     285,543     284,478     306,481
                                                             --------    --------    --------
Contribution from the Closed Block.......................    $ 24,503    $ 25,166    $ 31,478
                                                             ========    ========    ========
</TABLE>

     Closed Block insurance premiums were $185.4 million in 2000 compared to
$189.4 million in 1999 and $198.2 million in 1998. A decrease in insurance
premiums is consistent with the reduction of the Closed Block's life insurance
in force that is expected to continue over the life of the Block. Similarly, a
decrease in product charges on universal life policies included in the Closed
Block is expected as in force business declines due to deaths and surrenders,
although product charges remained relatively level between 2000 and 1999
primarily due to unusually low surrender activity in 2000. The distribution the
Company completed in October 2000 in connection with its demutualization
impacted surrender decisions as policies had to be in effect to be eligible to
receive a distribution.

                                        21
<PAGE>   24

     Net investment income for the Closed Block was $112.9 million in 2000
compared to $108.1 million and $115.8 million in 1999 and 1998, respectively.
The increase in 2000 as compared to 1999 was primarily due to increased average
invested assets and higher effective yields, while the decrease in 1999 as
compared to 1998 was primarily the result of lower effective yields, partially
offset by higher average invested assets.

     Closed Block policyowner benefits were $200.9 million in 2000 as compared
to $193.5 million in 1999 and $200.8 million in 1998. The increase in 2000 as
compared to 1999 was due to higher death benefits and higher reserves related to
the increased persistency as policyholders held their policies awaiting the
Company's demutualization distribution. The decrease in 1999 as compared to 1998
was due to lower death benefits and lower reserves and interest credited related
to the reduction in the life insurance in force between 1999 and 1998.

     The amortization of deferred policy acquisition costs and VOBA for the
Closed Block decreased by $5.3 million to $15.0 million in 2000 compared to
$20.3 million in 1999 and $26.3 million in 1998. Deferred policy acquisition
costs and VOBA are generally amortized in proportion to gross margins. The
decrease in the amortization of deferred policy acquisition costs and VOBA in
2000 and 1999 as compared to each prior year was consistent with the projected
reduction in the gross margins of the Closed Block as the life insurance in
force declines. The VOBA for the Closed Block was established as part of
Company's third quarter market value adjustment discussed previously.

     Closed Block dividends to policyowners were $68.3 million in 2000 compared
to $66.3 million in 1999 and $74.4 million in 1998. The increase in 2000
dividends to policyowners is primarily due to higher dividends related to the
maturing of the Closed Block. The decrease in 1999 dividends to policyowners as
compared to 1998 primarily reflects a decrease in the policyholder dividend
obligation. To the extent cumulative actual earnings of the Closed Block exceed
the cumulative expected earnings based on the actuarial calculation at the time
of the formation of the Closed Block, a policyholder dividend obligation
liability is recorded. The lower realized gains in 1999 as compared to 1998
reduced the policyholder dividend obligation in 1999.

     A summary of the Company's policyowner benefits follows:

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2000        1999        1998
                                                             --------    --------    --------
                                                                     ($ IN THOUSANDS)
<S>                                                          <C>         <C>         <C>
Life Insurance
  Traditional:
     Death benefits......................................    $  7,833    $  9,398    $  4,475
     Change in liability for future policy benefits and
       other policy benefits.............................      38,124      41,306      31,773
                                                             --------    --------    --------
       Total traditional.................................      45,957      50,704      36,248
  Universal:
     Death benefits in excess of cash value..............      22,403      21,978      17,928
     Interest credited on policyowner account balances...      37,149      34,023      35,318
     Other...............................................       1,818       1,107       2,949
                                                             --------    --------    --------
       Total universal...................................      61,370      57,108      56,195
                                                             --------    --------    --------
     Total life insurance benefits.......................     107,327     107,812      92,443
Annuities
  Interest credited to deferred annuity account
     balances............................................     282,677     281,063     282,465
  Other annuity benefits.................................      60,543      56,920      56,828
                                                             --------    --------    --------
     Total annuity benefits..............................     343,220     337,983     339,293
All other benefits.......................................         676         291          21
                                                             --------    --------    --------
Total policyowner benefits...............................    $451,223    $446,086    $431,757
                                                             ========    ========    ========
</TABLE>

     Total life insurance benefits were $107.3 million in 2000 compared to
$107.8 million in 1999 and $92.4 million in 1998. An increase in life insurance
benefits is expected as the traditional and universal blocks of business
continue to grow. However, the Company's traditional benefit expense actually
decreased in 2000

                                        22
<PAGE>   25

as compared to 1999 due to favorable mortality, as measured per amount in force,
and higher reinsurance credits. Universal life insurance benefits increased in
2000 and 1999 as compared to each prior year. Death benefits increased each year
as expected with the growth of the business in force. In addition, mortality
rates were slightly higher in 2000 as compared to 1999, as measured per amount
in force. Interest credited on universal policyowner account balances increased
$3.1 million in 2000 and decreased $1.3 million in 1999 as compared to each
prior year. The increase in 2000 was primarily due to higher average policyowner
account balances while the decrease in 1999 was primarily due to decreased
crediting rates. The weighted average interest crediting rate on policyowner
account balances was 5.62%, 5.67% and 6.08% in 2000, 1999 and 1998,
respectively.

     Annuity benefits were $343.2 million in 2000 compared to $338.0 million in
1999 and $339.3 million in 1998. The increase in 2000 primarily related to other
annuity benefits. In mid-1999, the Company issued two insurance contracts to two
commercial paper conduits. One of the contracts was terminated in the fourth
quarter of 1999. As a result, other annuity benefits for 2000 included
approximately $16.9 million of interest expense on one insurance contract for an
entire year compared to $13.1 million of interest expense on two insurance
contracts for half of a year in 1999. Interest credited to deferred annuity
account balances was $1.6 million higher in 2000 as compared to 1999, and $1.4
million lower in 1999 compared to 1998. Between 2000 and 1999, the weighted
average crediting rate on deferred fixed annuity account balances remained
constant and average deferred fixed annuity account balances decreased
approximately $15.0 million. The weighted average crediting rate on deferred
fixed annuity account balances was decreased 24 basis points to 4.95% in 1999
compared to 5.19% in 1998, and average fixed annuity account balances decreased
approximately $10.0 million in 1999. Spreads on deferred fixed annuities widened
30 basis points in 2000 and 14 basis points in 1999. Offsetting the declines in
deferred fixed annuity crediting rates and account balances were increased
earnings on equity-index and multi-choice annuity account balances. Earnings
credited to these products are included with interest credited.

     A summary of the Company's expenses follows:

<TABLE>
<CAPTION>
                                                               2000        1999        1998
                                                             --------    --------    --------
                                                                     ($ IN THOUSANDS)
<S>                                                          <C>         <C>         <C>
Life Insurance
  Underwriting, acquisition and other expenses...........    $ 50,117    $ 53,376    $ 43,376
  Amortization of deferred policy acquisition costs and
     value of business acquired (VOBA), net of non-core
     adjustment of $483, $282 and $1,038 for the years
     ended December 31, 2000, 1999 and 1998,
     respectively........................................      20,616      17,268      21,360
                                                             --------    --------    --------
     Total life insurance................................      70,733      70,644      64,736
Annuities
  Underwriting, acquisition and other expenses...........      52,554      37,204      37,563
  Amortization of deferred policy acquisition costs and
     value of business acquired (VOBA), net of non-core
     adjustment of ($9,205), $1,852 and ($1,237) for the
     years ended December 31, 2000, 1999 and 1998,
     respectively........................................      65,902      48,378      39,053
                                                             --------    --------    --------
     Total annuities.....................................     118,456      85,582      76,616
Amortization of deferred policy acquisition costs due to
  non-core realized gains or losses......................      (8,722)      2,134        (199)
All other expenses.......................................      19,381      25,787      21,159
Reorganization costs.....................................      11,265       7,062          --
                                                             --------    --------    --------
Total expenses...........................................    $211,113    $191,209    $162,312
                                                             ========    ========    ========
</TABLE>

     Total life insurance expenses were $70.7 million in 2000 compared to $70.6
million in 1999 and $64.7 million in 1998. Underwriting, acquisition and
insurance expenses were higher in 1999 as compared to 2000 and 1998 primarily
due to technology costs related to the Year 2000 Compliance Project and costs

                                        23
<PAGE>   26

associated with the Company's enhancement of its distribution systems.
Amortization of deferred policy acquisition costs and value of business acquired
(VOBA) increased $3.3 million in 2000 compared to 1999 and decreased $4.1
million in 1999 compared to 1998. Deferred policy acquisition costs are
generally amortized in proportion to gross margins. The increase in amortization
in 2000 as compared to 1999, primarily reflects the higher product margins
experienced in 2000 as compared to 1999 combined with an increase in
amortization of approximately $0.4 million associated with the Company's market
value adjustment completed at the end of the third quarter. Additional VOBA was
established as a result of the market value adjustment. The decrease in
amortization between 1999 and 1998 resulted from modifications made to the
dividend scale of traditional products to coincide with the decline in
investment yields at that time, resulting in increased estimated future gross
margins, and therefore lower current year amortization.

     Total annuity expenses increased by $32.9 million to $118.5 million in 2000
compared to $85.6 million in 1999 and $76.6 million in 1998. Underwriting,
acquisition and insurance expenses increased approximately $15.4 million in 2000
compared to 1999. Approximately $10.7 million of the increase related to the new
IMO acquired in the first quarter of 2000. The increase in expense due to the
new IMO was offset by the increase in other income from the IMO discussed
previously. The remainder of the increase was primarily due to costs associated
with consolidating the annuity operations in Topeka, additional agent related
expenses, such as recruiting and annual conventions, and increase incentive
compensation. Amortization of deferred policy acquisition costs and VOBA
increased $17.5 million in 2000 as compared to 1999 and increased $9.3 million
in 1999 as compared to 1998. The increase in amortization was partially
attributable to the general growth in the deferred policy acquisition cost asset
associated with the continued growth in annuity sales. In addition, VOBA
amortization increased in 2000 as surrenders of those policies associated with
the VOBA asset increased during the period, and due to the additional VOBA
established in connection with the Company's third quarter market value
adjustment.

     Other expenses decreased by $6.4 million in 2000 to $19.4 million compared
to $25.8 million in 1999 and $21.2 million in 1998. Other expenses primarily
consist of expenses related to the real estate management company and the
holding company and tend to fluctuate from period to period depending on the
properties under management each quarter. Beginning in 1999, the Company began
decreasing the number of properties under management and, accordingly, other
expenses are also declining. In addition, 1998 expenses were reduced by certain
one-time benefits and 1999 expenses included the amortization of the debt
issuance costs on the capital securities and senior notes issued in mid-1998 and
additional holding company expenses primarily related to air transportation,
incentive compensation and corporate development programs.

     The reorganization costs consist primarily of legal, actuarial and
consulting expenses associated with the reorganization of the Company discussed
previously. As these costs are not of a continuing nature, they have been
excluded from the Operating Segment amounts.

                                        24
<PAGE>   27

     A summary of the Company's income from operations by operating segment
follows:

<TABLE>
<CAPTION>
                                                               YEARS ENDED DECEMBER 31,
                                                          -----------------------------------
                                                            2000         1999         1998
                                                          ---------    ---------    ---------
                                                                   ($ IN THOUSANDS)
<S>                                                       <C>          <C>          <C>
Life Insurance
  Open Block:
     Revenues.........................................    $ 218,642    $ 209,162    $ 171,170
     Benefits and expenses............................     (178,060)    (178,456)    (157,179)
     Dividends to policyowners........................       (6,014)      (4,526)      (2,558)
  Closed Block contribution...........................       24,503       25,166       31,478
                                                          ---------    ---------    ---------
  Adjusted pre-tax operating income...................       59,071       51,346       42,911
Annuities
  Revenues............................................      549,888      512,786      500,959
  Benefits and expenses...............................     (461,676)    (423,565)    (415,909)
                                                          ---------    ---------    ---------
  Adjusted pre-tax operating income...................       88,212       89,221       85,050
All other adjusted pre-tax operating income...........       11,982        7,566          859
                                                          ---------    ---------    ---------
Total adjusted pre-tax operating income...............    $ 159,265    $ 148,133    $ 128,820
                                                          =========    =========    =========
</TABLE>

     Adjusted pre-tax operating income from Life Insurance operations was $59.1
million in 2000 compared to $51.3 million in 1999 and $42.9 million in 1998. The
increase in adjusted pre-tax operating income in 2000 compared to 1999 was
primarily due to increased investment income combined with decreased technology
expenses and favorable mortality costs. The market value adjustments had a
favorable impact of approximately $1.2 million in the Life Insurance operations
in 2000. The increase in 1999 adjusted pre-tax operating income as compared to
1998 was primarily due to increased investment income and decreased deferred
policy acquisition cost amortization which were partially offset by a decreased
contribution from the Closed Block and increased costs related to the Year 2000
Compliance Project and enhancement of the Company's administration and
distribution systems.

     Adjusted pre-tax operating income from Annuity operations was $88.2 million
in 2000 compared to $89.2 million in 1999 and $85.1 million in 1998. The
decrease in 2000 was primarily due to increased costs associated with the
consolidation of the annuity operations in Topeka and increased VOBA
amortization from increased surrenders. Partially offsetting these increased
expenses was a favorable impact of approximately $2.2 million from the Company's
third quarter market value adjustment. The increase in 1999 pre-tax operating
income compared to 1998 was primarily due to increased spreads.

     All other adjusted pre-tax operating income was $12.0 million in 2000
compared to $7.6 million in 1999 and $0.9 million in 1998. The increase in 2000
compared to 1999 was primarily due to lower expenses. The increase in 1999
compared to 1998 was primarily due to increased investment income on the cash
equivalents generated from the sale of the Company's discontinued operations in
mid-1998.

     Interest expense increased $0.7 million in 2000 to $29.7 million compared
to $29.0 million in 1999 and $27.9 million in 1998. The increased interest
expense in 2000 was primarily due to higher average outstanding borrowings
during 2000 as compared to 1999. The additional borrowings were primarily used
to support insurance company operations, affordable housing investments, fund
the acquisition of the new IMO, and fund a portion of the initial investment in
the downstream holding company of ILICO. The increased interest expense in 1999
as compared to 1998 was primarily due to higher interest rates on the senior
notes and adjustable conversion-rate equity security units outstanding during
1999 as compared to the revolving credit agreement borrowings outstanding during
1998.

     Income tax expense was $42.5 million in 2000 compared to $33.7 million in
1999 and $29.1 million in 1998. The effective tax rate was 36.9%, 34.4% and
31.5% for 2000, 1999 and 1998, respectively. The increase in the effective tax
rate each year was primarily due to the nondeductible expenses associated with
the

                                        25
<PAGE>   28

Company's reorganization combined with lower tax credits from affordable housing
and historic rehabilitation investments.

     Minority interest represents the minority stockholders ownership percentage
share of net income of ALHI prior to the Company's acquisition of this Minority
Interest. The minority shareholder ownership percentage was approximately 42%
for the nine months ended September 30, 2000 and the years ended December 31,
1999 and 1998. As a result of the Company's acquisition of the Minority
Interest, from the fourth quarter of 2000 forward, there will no longer be net
income applicable to the Minority Interest.

     Net income from continuing operations increased $15.2 million to $51.1
million in 2000 compared to $35.9 million in 1999 and $36.4 million in 1998. The
increase in 2000 as compared to 1999 was primarily due to the results of the
Life Insurance operations discussed previously, the decreased holding company
expenses, and the reduction in net income applicable to the Minority Interest.
While pre-tax operating income from the Life Insurance and Annuity operations
increased in 1999 as compared to 1998, net income from continuing operations
actually decreased slightly due to the demutualization expenses and higher
effective income tax rate.

     Net income was $51.8 million in 2000 compared to $38.4 million in 1999 and
$103.5 million in 1998. The Company sold the majority of its residential real
estate operating segment and its entire bank operating segment in 1998. The
Company recorded an after tax gain of $74.9 million on the sales which resulted
in the higher 1998 net income.

LIQUIDITY AND CAPITAL RESOURCES

THE COMPANY

     The Company's cash flows from operations consist of dividends from
subsidiaries, if declared and paid, interest from income on loans and advances
to its subsidiaries (including a surplus note issued to the Company by AmerUs),
investment income on assets held by the Company and fees which the Company
charges its subsidiaries and certain other of its affiliates for services,
offset by the expenses incurred for debt service, salaries and other expenses.

     The Company intends to rely primarily on dividends and interest income from
its life insurance subsidiaries in order to make dividend payments to its
shareholders. The payment of dividends by its life insurance subsidiaries is
regulated under various state laws. Generally, under the various state statutes,
the Company's life 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' surplus as of
the preceding year end or (ii) the net gain from operations for the previous
calendar year. Generally, the various state laws give the state regulators broad
discretion to approve or disapprove requests for dividends in excess of these
limits. Based on these limitations and 1999 results, the Company's subsidiaries
could pay an estimated $61.1 million in dividends in 2000 without obtaining
regulatory approval. Of this amount, the Company's subsidiaries paid the Company
$42.0 million in dividends during 2000. Based on 2000 results, the Company's
subsidiaries could pay an estimated $92.7 million in dividends in 2001 without
obtaining regulatory approval.

     The Company and its subsidiaries generated cash flows from operating
activities of $440.8 million, $739.9 million and $405.2 million for the years
ended December 31, 2000, 1999 and 1998, respectively. Operating cash flows were
primarily used to increase the Company's investment portfolio.

     The Company has a $150 million revolving credit facility with a syndicate
of lenders (the "Bank Credit Facility"). As of December 31, 2000, there was a
$75 million outstanding loan balance under the facility. The Bank Credit
Facility provides for typical events of default and covenants with respect to
the conduct of business of the Company and its subsidiaries and requires the
maintenance of various financial levels and ratios. Among other covenants, the
Company (a) cannot have a leverage ratio greater than 0.35:1.0, (b) cannot have
an interest coverage ratio less than 2.25:1.0 through June 30, 2001, 2.50:1.0
thereafter, (c) is
                                        26
<PAGE>   29

prohibited from paying cash dividends on its common stock in excess of an amount
equal to 3% of its consolidated net worth as of the last day of the preceding
fiscal year, and (d) must cause certain of its subsidiaries, including AmerUs
and Delta, to maintain certain ratings from A.M. Best and certain levels of
risk-based capital.

     As mentioned previously, the Company's demutualization became effective on
September 20, 2000. The actual distribution of cash, policy credits and the
Company's common stock to its former Members took place in late October, 2000.
Of the total cash and policy credits distributed of $339.8 million,
approximately $295.3 million came from cash balances on hand and $44.5 million
was funded by borrowings under the Company's revolving credit facility. In
addition, the Company distributed 17.4 million shares of its common stock to its
former Members resulting in total shares of common stock outstanding of 30.0
million shares.

     As previously reported, the Company has entered into a definitive agreement
for the combination of the Company with ILICO. ILICO will demutualize and its
members will receive cash, policy credits and the Company's common stock
equivalent to the value of 9.3 million shares of the common stock of AmerUs
Group. The transaction is expected to be completed in the first half of 2001.
Under the terms of the agreement, the Company is committed at a minimum to
distribute in cash the equivalent value of approximately 264,000 shares of its
common stock. The actual amount of the cash consideration will vary dependent
upon the price of the Company's common stock at or about the closing date and
the number of shares within the range that the Company elects to distribute in
the form of cash. The funding for the cash consideration is expected to
primarily come from the Company's revolving credit facility.

     The Company has previously announced a stock repurchase plan for up to
$50.0 million. As of December 31, 2000, the Company has $48.5 million of
remaining capacity under the plan. The Company would expect some greater
repurchase activity after December 31, 2000 if the market conditions are
favorable. The funds for the repurchase program would come from a combination of
internal sources from its life insurance subsidiaries and utilization of its
revolving credit facility.

     In July 2001, the forward common stock purchase contract component of the
Company's adjustable conversion-rate equity security units matures. Under the
terms of the contract, the Company will issue 4,080,500 shares of its common
stock at a price of $31.5625 per share for total consideration of $128.8
million. In lieu of paying cash to satisfy their purchase obligation, the unit
holders may surrender the preferred security component of the adjustable
conversion-rate equity security unit. The form of consideration will not be
known until April 2001 at which time the election must be made. If the Company
receives cash proceeds, the funds will probably be applied towards the Company's
revolving credit facility. If the preferred securities are tendered, the Company
intends to retire them. In either case, debt and capital securities outstanding
will be reduced by $128.8 million.

LIFE INSURANCE SUBSIDIARIES

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

     Management anticipates that funds to meet its short-term and long-term
capital expenditures, cash dividends to shareholders and operating cash needs
will come from existing capital and internally generated funds. Management
believes that the current level of cash and available-for-sale and short-term
securities, combined with expected net cash inflows from operations, maturities
of fixed maturity investments, principal payments on mortgage-backed securities
and its insurance products, will be adequate to meet the anticipated short-term
cash obligations of the Company's life insurance subsidiaries.
                                        27
<PAGE>   30

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

     The Company takes into account asset/liability management considerations in
the product development and design process. Contract terms for the Company's
interest-sensitive products include surrender and withdrawal provisions which
mitigate the risk of losses due to early withdrawals. These provisions generally
do one or more of the following: limit the amount of penalty-free withdrawals,
limit the circumstances under which withdrawals are permitted, or assess a
surrender charge or market value adjustment relating to the underlying assets.
The following table summarizes liabilities for interest-sensitive life products
and annuities by their contractual withdrawal provisions at December 31, 2000
(including liabilities in both the Closed Block and the general account):

<TABLE>
<CAPTION>
                                                              ($ IN MILLIONS)
                                                              ---------------
<S>                                                           <C>
Not subject to discretionary withdrawal.....................     $  369.7
Subject to discretionary withdrawal with adjustments:
  Specified surrender charges(A)............................      4,626.7
  Market value adjustments..................................      1,470.9
                                                                 --------
  Subtotal..................................................      6,097.6
                                                                 --------
Subject to discretionary withdrawal without adjustments.....      1,533.8
                                                                 --------
Total.......................................................     $8,001.1
                                                                 ========
</TABLE>

---------------
(A) Includes $1,081.7 million of statutory liabilities with a contractual
    surrender charge of less than five percent of the account balance.

     AmerUs is a party to a $250 million separate account funding agreement.
Under this agreement, a five-year floating rate insurance contract is issued to
a commercial paper conduit. The funding agreement is secured by assets in a
separate account and is further backed by the general account assets of AmerUs.
The separate account assets are legally segregated and are not subject to claims
that arise out of any other business of AmerUs. The separate account assets and
liabilities are included with general account assets in the financial
statements. The funding agreement may not be cancelled by the commercial paper
conduit unless there is a default under the agreement, but AmerUs Life may
terminate at any time.

     AmerUs and its joint venture partner are contingently liable in the event
the joint venture, AVLIC, cannot meet its obligations. At December 31, 2000,
AVLIC had statutory assets of $2,453.3 million, liabilities of $2,389.6 million
and surplus of $63.7 million.

     Through their respective memberships in the Federal Home Loan Banks (FHLB)
of Des Moines and Topeka, AmerUs and American are eligible to borrow under
variable-rate short term fed funds arrangements to provide additional liquidity.
These borrowings are secured and interest is payable at the current rate at the
time of any advance. There were no borrowings under these arrangements
outstanding at December 31, 2000. In addition, AmerUs has long-term advances
from FHLB outstanding of $15.6 million at December 31, 2000.

     The Company's life insurance subsidiaries may also obtain liquidity through
sales of investments. The Company's investment portfolio as of December 31, 2000
had a carrying value of $10 billion, including Closed Block investments.

                                        28
<PAGE>   31

     At December 31, 2000, the statutory surplus of the Company's subsidiaries
was approximately $472.7 million. The Company believes that this level of
statutory capital is more than adequate as each life insurance subsidiary's risk
based capital is significantly in excess of required levels.

     In the future, in addition to their cash flows from operations and
borrowing capacity, the life insurance subsidiaries would anticipate obtaining
their required capital from the Company as the Company has access to the public
debt and equity markets.

INVESTMENT PORTFOLIO

GENERAL

     The Company maintains a diversified portfolio of investments which is
supervised by an experienced in-house staff of investment professionals. The
Company employs sophisticated asset/liability management techniques in order to
achieve competitive yields, while maintaining risk at acceptable levels. The
asset portfolio is segmented by liability type, with tailored investment
strategies for specific product lines. Investment policies and significant
individual investments are subject to approval by the Investment Committee of
the Board of Directors of each of the life insurance companies and are overseen
by the Investment Committee of the Board of Directors of the Company. Management
regularly monitors individual assets and asset groups, in addition to monitoring
the overall asset mix. In addition, the insurance company boards and the
Investment Committee review investment guidelines and monitor internal controls.

INVESTMENT STRATEGY

     The Company's investment philosophy is to employ an integrated
asset/liability management approach with separate investment portfolios for
specific product lines, such as traditional life, universal life and annuities,
to generate attractive risk-adjusted returns on capital. Essential to this
philosophy is coordinating investments in the investment portfolio with product
strategies, focusing on risk-adjusted returns and identifying and evaluating
associated business risks.

     Investment policies and strategies have been established based on the
specific characteristics of each product line. The portfolio investment policies
and strategies establish asset duration, quality and other guidelines. The
Company utilizes analytical systems to establish an optimal asset mix for each
line of business. The Company seeks to manage the asset/liability mismatch and
the associated interest rate risk through active management of the investment
portfolio. Financial, actuarial, investment, product development and product
marketing professionals work together throughout the product development,
introduction and management phases to jointly develop and implement product
features, initial and renewal crediting strategies, and investment strategies
based on extensive modeling of a variety of factors under a number of interest
rate scenarios.

INVESTED ASSETS

     The Company maintains a diversified portfolio of investments, including
public and private fixed maturity securities, commercial mortgage loans and
equity real estate. The Company's objective is to maintain a high-quality,
diversified fixed maturity securities portfolio that produces a yield and total
return that supports the various product line liabilities and the Company's
earnings goals.

     The Closed Block was formed to give certain policyowners additional
assurances as to the dividend policies of the Company. As a result of
establishing the Closed Block on June 30, 1996, the Company allocated certain
assets from its investment portfolio to the Closed Block (see Note 1 to the
Consolidated Financial Statements for further discussion). The following table
summarizes consolidated invested assets by asset category as of December 31,
2000 and 1999, and sets forth the allocation of such assets between the Closed
Block and the general account. The remaining information relating to the
Company's investment

                                        29
<PAGE>   32

portfolio presents information about the investment portfolio on a combined
basis (including invested assets in both the Closed Block and the general
account).

<TABLE>
<CAPTION>
                                                                CONSOLIDATED INVESTED ASSETS
                                                                        DECEMBER 31,
                                   ---------------------------------------------------------------------------------------
                                                      2000                                         1999
                                   ------------------------------------------   ------------------------------------------
                                   CARRYING    CARRYING                         CARRYING    CARRYING
                                     VALUE       VALUE                            VALUE       VALUE
                                    CLOSED      GENERAL                 % OF     CLOSED      GENERAL                 % OF
                                     BLOCK      ACCOUNT    COMBINED    TOTAL      BLOCK      ACCOUNT    COMBINED    TOTAL
                                   ---------   ---------   ---------   ------   ---------   ---------   ---------   ------
                                                                       ($ IN MILLIONS)
<S>                                <C>         <C>         <C>         <C>      <C>         <C>         <C>         <C>
Fixed maturity securities
  Public.........................  $1,114.9    $6,084.1    $7,199.0     74.9%   $1,002.3    $5,953.2    $6,955.5     76.8%
  Private........................      76.7       985.9     1,062.6     11.1%       85.4       727.5       812.9      9.0%
                                   --------    --------    --------    ------   --------    --------    --------    ------
    Subtotal.....................   1,191.6     7,070.0     8,261.6     86.0%    1,087.7     6,680.7     7,768.4     85.8%
Equity securities................        --       152.9       152.9      1.6%         --        45.3        45.3      0.5%
Loans............................        --       534.9       534.9      5.6%         --       608.9       608.9      6.7%
Policy loans.....................     201.1       111.6       312.7      3.3%      188.0       109.9       297.9      3.3%
Real estate......................        --         3.2         3.2      0.0%         --        45.8        45.8      0.5%
Other investments................       2.9       317.7       320.6      3.3%        0.6       292.7       293.3      3.2%
Short-term investments...........        --        20.9        20.9      0.2%         --         0.1         0.1      0.0%
                                   --------    --------    --------    ------   --------    --------    --------    ------
    Total invested assets........  $1,395.6    $8,211.2    $9,606.8    100.0%   $1,276.3    $7,783.4    $9,059.7    100.0%
                                   ========    ========    ========    ======   ========    ========    ========    ======
</TABLE>

FIXED MATURITY SECURITIES

     The fixed maturity securities portfolio consists primarily of investment
grade corporate fixed maturity securities, high-quality MBS and United States
government and agency obligations. As of December 31, 2000 fixed maturity
securities were $8,261.6 million, or 86.0% of the carrying value of invested
assets with public and private fixed maturity securities constituting $7,199.0
million, or 87.1%, and $1,062.6 million, or 12.9%, of total fixed maturity
securities, respectively.

     The following table summarizes the composition of the fixed maturity
securities by category as of December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                         COMPOSITION OF FIXED MATURITY SECURITIES
                                                                       DECEMBER 31,
                                                         -----------------------------------------
                                                                2000                  1999
                                                         -------------------   -------------------
                                                         CARRYING     % OF     CARRYING     % OF
                                                           VALUE      TOTAL      VALUE      TOTAL
                                                         ---------   -------   ---------   -------
                                                                      ($ IN MILLIONS)
<S>                                                      <C>         <C>       <C>         <C>
U.S. government/agencies..............................   $  476.8      5.8%    $  349.2      4.5%
State and political subdivisions......................       47.3      0.6%        45.4      0.6%
Foreign government bonds..............................      151.0      1.8%       159.3      2.1%
Corporate bonds.......................................    5,198.4     62.9%     4,442.0     57.1%
Redeemable preferred stocks...........................      207.2      2.5%       261.1      3.4%
Asset-backed bonds....................................      646.5      7.8%       737.3      9.5%
MBS
  U.S. government/agencies............................    1,139.2     13.8%     1,420.6     18.2%
  Non-government/agencies.............................      395.2      4.8%       353.5      4.6%
                                                         --------    ------    --------    ------
  Subtotal-MBS........................................    1,534.4     18.6%     1,774.1     22.8%
                                                         --------    ------    --------    ------
     Total............................................   $8,261.6    100.0%    $7,768.4    100.0%
                                                         ========    ======    ========    ======
</TABLE>

                                        30
<PAGE>   33

     The following table summarizes fixed maturity securities by remaining
maturity as of December 31, 2000:

                REMAINING MATURITY OF FIXED MATURITY SECURITIES

<TABLE>
<CAPTION>
                                                              CARRYING     % OF
                                                               VALUE      TOTAL
                                                              --------    ------
                                                               ($ IN MILLIONS)
<S>                                                           <C>         <C>
Due:
  In one year or less (2001)................................  $  158.6      1.9%
  One to five years (2002-2006).............................   2,928.4     35.4%
  Five to 10 years (2007-2011)..............................   1,986.8     24.1%
  10 to 20 years (2012-2021)................................     940.5     11.4%
  Over 20 years (2022 and after)............................     712.9      8.6%
                                                              --------    ------
     Subtotal...............................................   6,727.2     81.4%
  MBS.......................................................   1,534.4     18.6%
                                                              --------    ------
     Total..................................................  $8,261.6    100.0%
                                                              ========    ======
</TABLE>

     The Company's portfolio of investment grade fixed maturity securities is
diversified by number and type of issuer. As of December 31, 2000, investment
grade fixed maturity securities included the securities of over 637 issuers,
with 2,157 different issues of securities. No non-government/agency issuer
represents more than 0.6% of investment grade fixed maturity securities.

     Below-investment grade fixed maturity securities as of December 31, 2000,
included the securities of 100 issuers representing 5.3% of total invested
assets, with the largest being a $17.8 million investment.

     As of December 31, 2000, 80.7% of total invested assets were investment
grade fixed maturity securities. The following table sets forth the credit
quality, by NAIC designation and Standard & Poor's rating equivalents, of fixed
maturity securities as of December 31, 2000:

                 FIXED MATURITY SECURITIES BY NAIC DESIGNATION
                               DECEMBER 31, 2000

<TABLE>
<CAPTION>
                                                              PUBLIC              PRIVATE              TOTAL
                                                         -----------------   -----------------   -----------------
  NAIC                                                   CARRYING    % OF    CARRYING    % OF    CARRYING    % OF
  DESIGNATION  STANDARD & POOR'S EQUIVALENT DESIGNATION   VALUE     TOTAL     VALUE     TOTAL     VALUE     TOTAL
  -----------  ----------------------------------------  --------   ------   --------   ------   --------   ------
                                                                           (DOLLARS IN MILLIONS)
  <C>          <S>                                       <C>        <C>      <C>        <C>      <C>        <C>
       1       A- or higher.....................         $4,763.4    66.2%   $  851.0    80.1%   $5,614.4    68.0%
       2       BBB- to BBB+.....................          1,935.2    26.9%      203.0    19.1%    2,138.2    25.9%
                                                         --------   ------   --------   ------   --------   ------
               Total investment grade...........          6,698.6    93.1%    1,054.0    99.2%    7,752.6    93.9%
                                                         --------   ------   --------   ------   --------   ------
       3       BB to BB+........................            348.6     4.8%        5.9     0.6%      354.5     4.3%
       4       BB to BB+........................            142.3     2.0%        1.2     0.1%      143.5     1.7%
     5 & 6     CCC or lower.....................              9.5     0.1%        1.5     0.1%       11.0     0.1%
                                                         --------   ------   --------   ------   --------   ------
  Total below investment grade.........................     500.4     6.9%        8.6     0.8%      509.0     6.1%
                                                         --------   ------   --------   ------   --------   ------
                      Total............................  $7,199.0   100.0%   $1,062.6   100.0%   $8,261.6   100.0%
                                                         ========   ======   ========   ======   ========   ======
</TABLE>

     MBS investments are mortgage-related securities including commercial
mortgage-backed securities (CMBS), collateralized mortgage obligations (CMOs),
and pass-through mortgage securities. Asset-backed securities are both
residential and non-residential including exposure to home equity loans, home
improvement loans, manufactured housing loans as well as securities backed by
loans on automobiles, credit cards, and other collateral or collateral bond
obligations. Residential mortgage pass-through and CMOs total $1,301.6 million
or 13.5% of total invested assets. Asset-backed residential mortgages total
$312.6 million or 3.3% of total invested assets. As of December 31, 2000, MBS
were $1,534.4 million or 16.0%, of total invested assets of which $1,139.2
million or 74.2% of MBS were from government sponsored enterprises. Other MBS
were

                                        31
<PAGE>   34

$395.2 million or 25.8%, of MBS as of December 31, 2000. Management believes
that the quality of assets in the MBS portfolio is generally high, with 89% of
such assets representing agency backed or "AAA" rated securities.

     The Company uses interest rate swaps, caps, and options to reduce its
exposure to changes in interest rates and to manage duration mismatches. The
Company also uses call options to hedge equity-indexed annuities. Although the
Company is subject to the risk that counterparties will fail to perform, credit
standings of counterparties are monitored regularly. The Company only enters
into transactions with highly rated counterparties. The Company is also subject
to the risk associated with changes in the value of contracts. However, such
adverse changes in value generally are offset by changes in the value of the
items being hedged. The notional principal amounts of the swaps, caps, and
options, which represent the extent of the Company's involvement in such
contracts but not the risk of loss, at December 31, 2000, amounted to $957.7
million. The swaps had a carrying value of a net payable position of $4.7
million at December 31, 2000 and a fair value which amounted to a net payable
position of $6.0 million at December 31, 2000. The carrying value and fair value
of options amounted to $101.4 million and $97.3 million, respectively. The
interest rate caps and options are reflected as "other investments" on the
Company's consolidated financial statements as of December 31, 2000. The net
amount payable or receivable from interest rate swaps and caps are accrued as an
adjustment to interest income.

MORTGAGE LOANS

     As of December 31, 2000, mortgage loans in the Company's investment
portfolio were $534.9 million, or 5.6% of the aggregate carrying value of
invested assets, including the Closed Block. As of December 31, 2000, commercial
mortgage loans and residential mortgage loans comprised 94.0% and 6.0%,
respectively, of the mortgage loans in the Company's investment portfolio.

     Commercial mortgage loans consist primarily of fixed-rate mortgage loans.
As of December 31, 2000, the Company held 395 individual commercial mortgage
loans with an average balance of $1.3 million.

     As of December 31, 2000, one loan in the Company's loan portfolio with a
principal balance of $1.8 million was classified as delinquent and no loans were
in foreclosure. As of the same date, only one loan aggregating $0.9 million, or
0.2%, of the Company's loan portfolio (as measured by principal balance) was
classified as restructured. During 2000, the Company had no foreclosures.

EQUITY REAL ESTATE

     In recent years the Company has significantly reduced its equity real
estate portfolio. As of December 31, 2000, the carrying value of investment real
estate, including the Closed Block, was $3.2 million.

OTHER

     The Company held $312.7 million of policy loans on individual insurance
products as of December 31, 2000. Policy loans are permitted to the extent of a
policy's contractual limits and are fully collateralized by policy cash values.

     As of December 31, 2000, the Company held equity securities of $152.9
million. The largest holding of equity securities, Indianapolis Life Group of
Companies, had a carrying value of $103.7 million as of December 31, 2000. This
holding is part of the Company's proposed combination transaction with ILICO
discussed previously.

     The Company held $341.5 million of other invested assets (including
short-term investments) on December 31, 2000. Other invested assets consist
primarily of various joint venture and limited partnership investments and
derivatives.

                                        32
<PAGE>   35

EFFECTS OF INFLATION AND INTEREST RATE CHANGES

     The Company does not believe that inflation has had a material effect on
its consolidated results of operations.

     Interest rate changes may have temporary effects on the sale and
profitability of the annuities and life insurance products offered by the
Company. For example, if interest rates rise, competing investments (such as
annuities or life insurance products offered by the Company's competitors,
certificates of deposit, mutual funds, and similar instruments) may become more
attractive to potential purchasers of the Company's products until the Company
increases the interest rate credited to owners of its annuities and life
insurance products. In contrast, as interest rates fall, the Company attempts to
adjust its credited rates to compensate for the corresponding decline in
reinvestment rates. The Company monitors interest rates and sells annuities and
life insurance policies that permit flexibility to make interest rate changes as
part of its management of interest spreads. However, the profitability of the
Company's products is based upon persistency, mortality and expenses, as well as
interest rate spreads.

     The Company manages its investment portfolio in part to reduce its exposure
to interest rate fluctuations. In general, the market value of its fixed
maturity portfolio increases or decreases in an inverse relationship with
fluctuations in interest rates, and net investment income increases or decreases
in a direct relationship with interest rate changes.

     The Company has developed an asset/liability management approach with
separate investment portfolios for major product lines such as traditional life,
universal life and annuities. Investment policies and strategies have been
established based on the specific characteristics of each product line. The
portfolio investment policies and strategies establish asset duration, quality
and other guidelines. The Company utilizes analytical systems to establish an
optimal asset mix for each line of business. The Company seeks to manage the
asset/liability mismatch and the associated interest rate risk through active
management of the investment portfolio. Financial, actuarial, investment,
product development and product marketing professionals work together throughout
the product development, introduction and management phases to jointly develop
and implement product features, initial and renewal crediting strategies, and
investment strategies based on extensive modeling of a variety of factors under
a number of interest rate scenarios.

     In force reserves and the assets allocated to each segment are modeled on a
regular basis to analyze projected cash flows under a variety of economic
scenarios. The result of this modeling is used to modify asset allocation,
investment portfolio duration and convexity and renewal crediting strategies.
The Company invests in CMOs as part of its basic portfolio strategy, but uses
other types of derivatives only as a hedge against the effects of interest rate
fluctuations or to synthetically alter the investment characteristics of
specific assets. For a further discussion and disclosure of the nature and
extent of the Company's use of derivatives, see Note 13 to the Consolidated
Financial Statements.

FEDERAL INCOME TAX MATTERS

     The Company and its non-life subsidiaries file a consolidated federal
income tax return. The life insurance subsidiaries file separate federal income
tax returns. The separate return method is used to compute the Company's
provision for federal income taxes. Deferred income tax assets and liabilities
are determined based on differences among the financial reporting and tax bases
of assets and liabilities and are measured using the enacted tax rates and laws.

EMERGING ACCOUNTING MATTERS

SFAS 133, 137 AND 138

     In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS
No. 133 defines derivative instruments and provides comprehensive accounting and
reporting standards for the recognition and measurement of derivative and
hedging activities (including certain instruments embedded in other contracts).
It requires derivatives to be recorded in the consolidated balance sheet at fair
value and establishes criteria for hedges of changes in the
                                        33
<PAGE>   36

fair value of assets, liabilities or firm commitments, hedges of variable cash
flows or forecasted transactions, and hedges of foreign currency exposures of
net investments in foreign operations. Changes in the fair value of derivatives
not meeting specific hedge accounting criteria would be recognized in the
consolidated statement of operations. In June 1999, the FASB issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities -- Deferral
of the Effective Date of FASB Statement No. 133." SFAS No. 137 delays the
effective date of SFAS No. 133 for all fiscal quarters until fiscal years
beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138
"Accounting for Certain Derivative Instruments and Certain Hedging Activities,
an amendment of FASB Statement No. 133." SFAS No. 138 addresses a limited number
of Statement 133 implementation issues, including expanding normal purchase and
normal sale exceptions, redefining specific risks that can be identified as
hedged risks and defining certain other provisions related to foreign-currency
and intercompany derivatives. SFAS No. 138 is effective for fiscal years
beginning after June 15, 2000. The Company has determined that the transition
adjustments resulting from the adoption of this statement will be approximately
a $7 million reduction in net income and a $3 million increase in accumulated
other comprehensive income.

SFAS 140

     In September 2000, the FASB issued SFAS No. 140 "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities." SFAS No.
140 replaces SFAS No. 125 with the same title. It revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures, but it carries over most of SFAS
No. 125's provisions without reconsideration. SFAS No. 140 is effective for
transfers and servicing of financial assets and extinguishment of liabilities
occurring after March 31, 2001 and for recognition and reclassification of
collateral and for disclosures relating to securitization transactions and
collateral for fiscal years ending after December 15, 2000. The Company has
evaluated SFAS No. 140 and determined there to be no material impact on the
Consolidated Financial Statements.

SOP 00-3

     In December 2000, the Accounting Standards Executive Committee issued
Statement of Position 00-3 (SOP 00-3) "Accounting by Insurance Enterprises for
Demutualizations and Formations of Mutual Holding Companies and for Certain
Long-Duration Participating Contracts," which has been cleared by the FASB. SOP
00-3 provides guidance on accounting by insurance enterprises for
demutualizations and the formation of mutual insurance holding companies. It
specifies the financial statement presentation of a closed block, the accounting
for participating contracts, the accounting for expenses related to a
demutualization and formation of a mutual insurance holding company, the
accounting for retained earnings and other comprehensive income at the date of
demutualization and the formation of a mutual insurance holding company, and the
accounting for a distribution from a mutual insurance holding company to its
members. SOP 00-3 is effective no later than the end of the fiscal year that
begins after December 15, 2000. The Company has evaluated SOP 00-3 and has
adopted the guidance on accounting for demutualization expenses as of December
31, 2000. The remainder of the provisions of the SOP will require the Company to
modify its presentation of the Closed Block in its Consolidated Financial
Statements to no longer show the operations of the Closed Block and the assets
and liabilities of the Closed Block as single line items. In addition, the SOP
will require the Company to report unrealized gains and losses on Closed Block
investments as a component of the Closed Block policyholder dividend obligation
rather than accumulated other comprehensive income. At December 31, 2000, this
change would have resulted in a $6.0 million reduction in accumulated other
comprehensive income.

STATUTORY ACCOUNTING CODIFICATION

     The NAIC has codified statutory accounting practices, which are expected to
constitute the only source of prescribed statutory accounting practices and are
effective January 1, 2001. Codification will change prescribed statutory
accounting practices and may result in changes to the accounting practices that
insurance enterprises use to prepare their statutory financial statements. The
states of Iowa and Kansas have adopted the

                                        34
<PAGE>   37

NAIC's codification without exception. The Company has determined the impact of
adopting the NAIC codification on its statutory financial statements will be an
increase to statutory surplus of approximately $25 million.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

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

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

     The tables below provides information about the Company's fixed maturity
investments and mortgage loans at December 31, 2000 and 1999. The tables present
cash flows of principal amounts and related weighted average interest rates by
expected maturity dates. The cash flows are based on the earlier of the call
date or the maturity date or, for mortgage-backed securities, expected payment
patterns. Actual cash flows could differ from the expected amounts.

     December 31, 2000

<TABLE>
<CAPTION>
                                                               EXPECTED CASH FLOWS
                                                                                                   FAIR
               AMORTIZED                 2001   2002   2003   2004   2005   THEREAFTER    COST    VALUE
               ---------                 ----   ----   ----   ----   ----   ----------   ------   ------
                                                                 ($ IN MILLIONS)
<S>                                      <C>    <C>    <C>    <C>    <C>    <C>          <C>      <C>
Fixed maturity securities..............  $325   $476   $836   $695   $937     $3,833     $7,102   $7,070
Average interest rate..................  7.7%   7.9%   7.1%   7.2%   7.1%       7.6%
Mortgage loans.........................  $ 38   $ 35   $ 37   $ 43   $ 39     $  343     $  535   $  569
Average interest rate..................  8.3%   8.5%   8.3%   8.3%   8.3%       8.1%
     Total.............................  $363   $511   $873   $738   $976     $4,176     $7,637   $7,639
                                         ====   ====   ====   ====   ====     ======     ======   ======
</TABLE>

     December 31, 1999

<TABLE>
<CAPTION>
                                                              EXPECTED CASH FLOWS
                                                                                                  FAIR
              AMORTIZED                 2000   2001   2002   2003   2004   THEREAFTER    COST    VALUE
              ---------                 ----   ----   ----   ----   ----   ----------   ------   ------
                                                                ($ IN MILLIONS)
<S>                                     <C>    <C>    <C>    <C>    <C>    <C>          <C>      <C>
Fixed maturity securities.............  $321   $381   $457   $826   $669     $4,353     $7,007   $6,681
Average interest rate.................  7.0%   6.9%   7.0%   6.5%   6.4%       7.3%
Mortgage loans........................  $ 55   $ 49   $ 35   $ 38   $ 48     $  390     $  615   $  633
Average interest rate.................  9.4%   9.5%   9.5%   9.2%   9.3%       8.4%
     Total............................  $376   $430   $492   $864   $717     $4,743     $7,622   $7,314
                                        ====   ====   ====   ====   ====     ======     ======   ======
</TABLE>

                                        35
<PAGE>   38

     The Company and its subsidiaries have consistently invested in high quality
marketable securities. As a result, management believes that the Company has
minimal credit quality risk. Fixed maturity securities are comprised of U.S.
Treasury, government agency, mortgage-backed and corporate securities.
Approximately 69% of fixed maturity securities are issued by the U.S. Treasury
or U.S. government agencies or are rated A or better by Moody's, Standard and
Poor's, or the NAIC. Approximately 6% of the bond portfolio is below investment
grade. Fixed maturity securities have an average maturity of approximately 7.08
years.

     Prepayment risk refers to the changes in prepayment patterns that can
either shorten or lengthen the expected timing of the principal repayments and
thus the average life and the effective yield of a security. Such risk exists
primarily within the Company's portfolio of mortgage-backed securities.
Management monitors such risk regularly. The Company invests primarily in those
classes of mortgage-backed securities that are less subject to prepayment risk.

     The Company's use of derivatives is generally limited to hedging purposes
and has principally consisted of using interest rate swaps, caps, swaptions and
options. These instruments, viewed separately, subject the Company 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. (See Note 14 of the Consolidated Financial
Statements for additional information).

     Equity price risk is the potential loss arising from changes in the value
of equity securities. In general, equities have more year-to-year price
variability than intermediate term grade bonds. However, returns over longer
time frames have been consistently higher. The Company's equity securities
consist primarily of its investments in ILICO and AMAL discussed previously. The
remainder of the Company's equity securities are high quality and readily
marketable.

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

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The Company's consolidated financial statements begin on page F-1.
Reference is made to the Index to Financial Statements on page F-1 herein.

     Additional financial statement schedules begin on page S-1. Reference is
made to the Index to Financial Statement Schedules on page S-1 herein.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

     KPMG LLP was the independent auditors for AmerUs Group Co. (the Company).
On February 19, 2001, management of the Company notified KPMG that their
appointment as independent auditors will be terminated effective upon issuance
of KPMG's reports on the consolidated financial statements of the Company and
subsidiaries for the year ended December 31, 2000. Ernst & Young LLP was engaged
as independent auditors effective upon KPMG's termination. The decision to
change auditors was recommended by the audit committee of the board of directors
and approved by the board of directors.

     In connection with the audits of the two fiscal years ended December 31,
2000, there were no disagreements with KPMG on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures, which disagreements if not resolved to their satisfaction would have
caused them to make reference in connection with their opinion to the subject
matter of the disagreement.

     The audit reports of KPMG on the consolidated financial statements of
AmerUs Group Co. and subsidiaries as of and for the years ended December 31,
2000 and 1999, did not contain any adverse opinion or disclaimer of opinion, nor
were they qualified or modified as to uncertainty, audit scope, or accounting
principles.
                                        36
<PAGE>   39

                                    PART III

     The Notice of 2000 Annual Meeting of Shareholders and Proxy Statement,
which, when filed pursuant to Regulation 14A under the Securities Exchange Act
of 1934, are incorporated by reference in this Annual Report on Form 10-K
pursuant to General Instruction G(3) of Form 10-K, provides the information
required under Part III (Items 10. Directors and Executive Officers of the
Registrant, 11. Executive Compensation, 12. Security Ownership of Certain
Beneficial Owners and Management and 13. Certain Relationships and Related
Transactions).

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) 1.   Financial Statements. Reference is made to the index on page F-1 of the
         report.

     2.   Financial Statement Schedules. Reference is made to the Index on page
          S-1 of the report.

     3.   Exhibits Reference is made to the Index to Exhibits on page 38 of the
          report.

(b) Reports on Form 8-K

     None.

                                        37
<PAGE>   40

                       AMERUS GROUP CO. AND SUBSIDIARIES

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
  NO.                             DESCRIPTION
-------                           -----------
<C>       <S>
 2.1      Plan of Reorganization dated October 27, 1995, filed as
          Exhibit 2.1 to the registration statement of AmerUs Life
          Holdings, Inc. on Form S-1, Registration Number 333-12239,
          is hereby incorporated by reference.
 2.2      Amended and Restated Agreement and Plan of Merger, dated as
          of September 19, 1997 and as amended and restated as of
          October 8, 1997, by and among AmerUs Life Holdings, Inc.,
          AFC Corp. and AmVestors Financial Corporation ("AmVestors"),
          filed as Exhibit 2.2 to the Registration Statement of AmerUs
          Life Holdings, Inc. on Form S-4, Registration Number
          333-40065 is hereby incorporated by reference.
 2.3      Agreement and Plan of Merger, dated as of August 13, 1997
          and as amended as of September 5, 1997, among AmerUs Life
          Holdings, Inc., a wholly owned subsidiary of AmerUs Life
          Holdings, Inc. and Delta Life Corporation, filed as Exhibit
          2.2 to Form 8-K of AmerUs Life Holdings, Inc. dated October
          8, 1997, is hereby incorporated by reference.
 2.4      Combination and Investment Agreement, dated February 18,
          2000, among American Mutual Holding Company, AmerUs Life
          Holdings, Inc., Indianapolis Life Insurance Company and The
          Indianapolis Life Group of Companies, Inc., filed as Exhibit
          2.1 to AmerUs Life Holdings, Inc.'s report on Form 8-K/A on
          March 6, 2000, is hereby incorporated by reference.
 2.5      Purchase Agreement, dated as of February 18, 2000, by and
          between American Mutual Holding Company and AmerUs Life
          Holdings, Inc., filed as Exhibit 2.5 on Form 10-K, dated
          March 8, 2000, is hereby incorporated by reference.
 2.6      Agreement and Plan of Merger, dated December 17, 1999, by
          and between American Mutual Holding Company and AmerUs Life
          Holdings, Inc., filed as Exhibit 2.6 on Form 10-K, dated
          March 8, 2000, is hereby incorporated by reference.
 2.7      Amendment No. 1 to Agreement and Plan of Merger, dated
          February 18, 2000, by and between American Mutual Holding
          Company and AmerUs Life Holdings, Inc., filed as Exhibit 2.7
          on Form 10-K, dated March 8, 2000, is hereby incorporated by
          reference.
 2.8      Letter agreement, dated December 17, 1999, by and between
          American Mutual Holding Company and AmerUs Life Holdings,
          Inc., filed as Exhibit 2.8 on Form 10-K, dated March 8,
          2000, is hereby incorporated by reference.
 2.9      Notification Agreement, dated as of February 18, 2000, by
          and among American Mutual Holding Company, AmerUs Life
          Holdings, Inc. and Bankers Trust Company, filed as Exhibit
          2.9 on Form 10-K, dated March 8, 2000, is hereby
          incorporated by reference.
 2.10     Amendment No. 2 to Agreement and Plan of Merger, dated April
          3, 2000, by and between American Mutual Holding Company and
          AmerUs Life Holdings, Inc., filed as Exhibit 2.10 on Form
          10-Q, dated May 15, 2000, is hereby incorporated by
          reference.
 2.11     Amendment No. 1 to the Purchase Agreement, dated April 3,
          2000, by and between American Mutual Holding Company and
          AmerUs Life Holdings, Inc., filed as Exhibit 2.11 on Form
          10-Q, dated May 15, 2000, is hereby incorporated by
          reference.
 2.12     Amendment to Combination and Investment Agreement dated
          February 18, 2000 among American Mutual Holding Company,
          AmerUs Life Holdings, Inc., Indianapolis Life Insurance
          Company and The Indianapolis Life Group of Companies, Inc.,
          dated September 18, 2000, filed as Exhibit 2.2 to Form
          8-K12G3 of the Registrant dated September 21, 2000.
 3.1      Amended and Restated Articles of Incorporation of the
          Registrant filed as Exhibit 3.1 on Form 10-Q, dated November
          14, 2000 is hereby incorporated by reference.
</TABLE>

                                        38
<PAGE>   41

<TABLE>
<CAPTION>
EXHIBIT
  NO.                             DESCRIPTION
-------                           -----------
<C>       <S>
 3.2      Amended and Restated Bylaws of the Registrant, filed as
          Exhibit 3.2 on Form 10-Q, dated November 14, 2000 is hereby
          incorporated by reference.
 4.1      Amended and Restated Trust Agreement dated as of February 3,
          1997 among AmerUs Life Holdings, Inc., Wilmington Trust
          Company, as property trustee, and the administrative
          trustees named therein (AmerUs Capital I business trust),
          filed as Exhibit 3.6 to the registration statement of AmerUs
          Life Holdings, Inc. and AmerUs Capital I on Form S-1,
          Registration Number 333-13713, is hereby incorporated by
          reference.
 4.2      Indenture dated as of February 3, 1997 between AmerUs Life
          Holdings, Inc. and Wilmington Trust Company relating to the
          Company's 8.85% Junior Subordinated Debentures, Series A,
          filed as Exhibit 4.1 to the registration statement of AmerUs
          Life Holdings, Inc. and AmerUs Capital I on Form S-1,
          Registration Number, 333-13713, is hereby incorporated by
          reference.
 4.3      Guaranty Agreement dated as of February 3, 1997 between
          AmerUs Life Holdings, Inc., as guarantor, and Wilmington
          Trust Company, as trustee, relating to the 8.85% Capital
          Securities, Series A, issued by AmerUs Capital I, filed as
          Exhibit 4.4 to the registration statement on Form S-1,
          Registration Number, 333-13713, is hereby incorporated by
          reference.
 4.4      Common Stock Purchase Warrant, filed as Exhibit (10)(v) to
          Form 10-Q of AmVestors Financial Corporation dated May 13,
          1992, is hereby incorporated by reference.
 4.5      Amended and Restated Declaration of Trust of AmerUs Capital
          II, dated as of July 27, 1998, among AmerUs Life Holdings,
          Inc., First Union Trust Company and the administrative
          trustees named therein, relating to AmerUs Life Holdings,
          Inc.'s 7.0% ACES Units, filed as Exhibit 4.5 on Form 10-Q,
          dated August 13, 1998, is hereby incorporated by reference.
 4.6      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.
 4.7      Common Trust Securities Guarantee Agreement, dated as of
          July 27, 1998, by AmerUs Life Holdings, Inc., relating to
          AmerUs Life Holdings, Inc.'s 7.0% ACES Units, filed as
          Exhibit 4.7 on Form 10-Q, dated August 13, 1998, is hereby
          incorporated by reference.
 4.8      QUIPS Guarantee Agreement, dated as of July 27, 1998, by
          AmerUs Life Holdings, Inc., relating to AmerUs Life
          Holdings, Inc.'s 7.0% ACES Units, filed as Exhibit on Form
          10-Q, dated August 13, 1998, is hereby incorporated by
          reference.
 4.9      Master Unit Agreement, dated as of July 27, 1998, between
          AmerUs Life Holdings, Inc. and First Union National Bank
          relating to AmerUs Life Holdings, Inc.'s 7.0% ACES Units,
          filed as Exhibit 4.9 on Form 10-Q, dated August 13, 1998, is
          hereby incorporated by reference.
 4.10     Call Option Agreement, dated as of July 27, 1998, between
          Goldman, Sachs & Co. and First Union National Bank relating
          to AmerUs Life Holdings, Inc.'s 7.0% ACES Units, filed as
          Exhibit 4.10 on Form 10-Q, dated August 13, 1998, is hereby
          incorporated by reference.
 4.11     Pledge Agreement, dated as of July 27, 1998, among AmerUs
          Life Holdings, Inc., Goldman, Sachs & Co. and First Union
          National Bank relating to AmerUs Life Holdings, Inc.'s 7.0%
          ACES Units, filed as Exhibit 4.11 on Form 10-Q, dated August
          13, 1998, is hereby incorporated by reference.
 4.12     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.
 4.13     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.
</TABLE>

                                        39
<PAGE>   42

<TABLE>
<CAPTION>
EXHIBIT
  NO.                             DESCRIPTION
-------                           -----------
<C>       <S>
 4.14     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.
 4.15     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.
 4.16     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.
 4.17     First Supplement to Subordinated Indenture, dated July 27,
          1998, relating to AmerUs Life Holdings, Inc.'s 6.86% Junior
          Subordinated Deferrable Interest Debentures, among American
          Mutual Holding Company, AmerUs Life Holdings, Inc. and First
          Union National Bank, as Indenture Trustee, dated September
          20, 2000, filed as Exhibit 4.17 on Form 10-Q, dated November
          14, 2000, is hereby incorporated by reference.
 4.18     First Supplement to Master Unit Agreement dated July 27,
          1998, relating to AmerUs Life Holdings, Inc.'s 7.0% ACES
          units, between American Mutual Holding Company and First
          Union National Bank, as Unit Agent, dated September 20,
          2000, filed as Exhibit 4.18 on Form 10-Q, dated November 14,
          2000, is hereby incorporated by reference.
 4.19     Assignment and Assumption Agreement to the QUIPS Guarantee
          Agreement dated July 27, 1998, relating to AmerUs Life
          Holdings, Inc.'s 7.0% ACES units, between American Mutual
          Holding Company and AmerUs Life Holdings, Inc., dated
          September 20, 2000, filed as Exhibit 4.19 on Form 10-Q,
          dated November 14, 2000, is hereby incorporated by
          reference.
 4.20     Assignment and Assumption Agreement to the Common Trust
          Securities Guarantee Agreement dated July 27, 1998, relating
          to AmerUs Life Holdings, Inc.'s 7.0% ACES units, between
          American Mutual Holding Company and AmerUs Life Holdings,
          Inc., dated September 20, 2000, filed as Exhibit 4.20 on
          Form 10-Q, dated November 14, 2000, is hereby incorporated
          by reference.
 4.21     First Supplement to Purchase Contracts between American
          Mutual Holding Company and Holders, as specified, dated
          September 20, 2000, filed as Exhibit 4.21on Form 10-Q, dated
          November 14, 2000, is hereby incorporated by reference.
 4.22     First Supplement to the Pledge Agreement dated July 27,
          1998, relating to AmerUs Life Holdings, Inc.'s 7.0% ACES
          units, among American Mutual Holding Company, Goldman Sachs
          & Co., as Call Option Holder, the Chase Manhattan Bank, as
          Collateral Agent and First Union National Bank, as Unit
          Agent, dated September 20, 2000, filed as Exhibit 4.22 on
          Form 10-Q, dated November 14, 2000, is hereby incorporated
          by reference.
 4.23     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.
10.1      Joint Venture Agreement, dated as of June 30, 1996, between
          American Mutual Insurance Company and Ameritas Life
          Insurance Corp., filed as Exhibit 10.2 on Form 10-K, dated
          March 25, 1998, is hereby incorporated by reference.
10.2      Management and Administration Service Agreement, dated as of
          April 1, 1996, among American Mutual Life Insurance Company,
          Ameritas Variable Life Insurance Company and Ameritas Life
          Insurance Corp., filed as Exhibit 10.3 to the registration
          statement of AmerUs Life Holdings, Inc. on Form S-1,
          Registration Number 333-12239, is hereby incorporated by
          reference.
</TABLE>

                                        40
<PAGE>   43

<TABLE>
<CAPTION>
EXHIBIT
  NO.                             DESCRIPTION
-------                           -----------
<C>       <S>
10.3      AmerUs Life Holdings, Inc. Executive Stock Purchase Plan,
          dated November 13, 1998, filed as Exhibit 4.11 to the
          registration statement of AmerUs Life Holdings, Inc. on Form
          S-8, Registration Number 333-72237, is hereby incorporated
          by reference.
10.4      AllRAmerUs Supplemental Executive Retirement Plan, effective
          January 1, 1996, filed as Exhibit 10.6 to the registration
          statement of AmerUs Life Holdings, Inc. on Form S-1,
          Registration Number 333-12239, is hereby incorporated by
          reference.
10.5      Management Incentive Plan, filed as Exhibit 10.9 to the
          registration statement of AmerUs Life Holdings, Inc. on Form
          S-1, Registration Number 333-12239, is hereby incorporated
          by reference.
10.6      AmerUs Life Insurance Company Performance Share Plan, filed
          as Exhibit 10.10 to the registration statement of AmerUs
          Life Holdings, Inc. on Form S-1, Registration Number
          333-12239, is hereby incorporated by reference.
10.7      AmerUs Life Stock Incentive Plan, filed as Exhibit 10.11 to
          the registration statement of AmerUs Life Holdings, Inc. on
          Form S-1, Registration Number 333-12239, is hereby
          incorporated by reference.
10.8      AmerUs Life Non-Employee Director Stock Plan, filed as
          Exhibit 10.13 to the registration statement of AmerUs Life
          Holdings, Inc. on Form S-1, Registration Number 333-12239,
          is hereby incorporated by reference.
10.9      Form of Indemnification Agreement executed with directors
          and certain officers, filed as Exhibit 10.33 to the
          registration statement of AmerUs Life Holdings, Inc. on Form
          S-1, Registration Number 333-12239, is hereby incorporated
          by reference.
10.10     Tax Allocation Agreement dated as of November 4, 1996, filed
          as Exhibit 10.68 to the registration statement of AmerUs
          Life Holdings, Inc. on Form S-1, Registration Number
          333-12239, is hereby incorporated by reference.
10.11     Credit Agreement, dated as of October 23, 1997, among AmerUs
          Life Holdings, Inc., Various Lender Institutions, the
          Co-Arrangers and The Chase Manhattan Bank, as Administrative
          Agent, filed as Exhibit 10.84 to the registration statement
          of AmerUs Life Holdings, Inc. on Form S-4, Registration
          Number 333-40065, is incorporated by reference.
10.12     AmVestors Financial Corporation 1996 Incentive Stock Option
          Plan, filed as Exhibit (4)(a) to Registration Statement of
          AmVestors Financial Corporation on Form S-8, Registration
          Number 333-14571 dated October 21, 1996, is hereby
          incorporated by reference.
10.13     Consent dated as of May 20, 1998 to the Credit Agreement
          dated as of October 23, 1997 among AmerUs Life Holdings,
          Inc., Various Lender Institutions, the Co-Arrangers and The
          Chase Manhattan Bank, as Administrative Agent, filed as
          Exhibit 10.72 on Form 10-Q, dated November 12, 1998, is
          hereby incorporated by reference.
10.14     First Amendment dated as of May 30, 1997 to the Credit
          Agreement dated as of October 23, 1997 among AmerUs Life
          Holdings, Inc., Various Lender Institutions, the
          Co-Arrangers and The Chase Manhattan Bank, as Administrative
          Agent, filed as Exhibit 10.73 on Form 10-Q, dated November
          12, 1998, is hereby incorporated by reference.
10.15     Second Amendment dated as of June 22, 1998 to the Credit
          Agreement dated as of October 23, 1997 among AmerUs Life
          Holdings, Inc., Various Lender Institutions, the
          Co-Arrangers and The Chase Manhattan Bank, as Administrative
          Agent, filed as Exhibit 10.74 on Form 10-Q, dated November
          12, 1998, is hereby incorporated by reference.
10.16     Second Consent and Amendment dated as of October 2, 1998 to
          the Credit Agreement dated as of October 23, 1997 among
          AmerUs Life Holdings, Inc., Various Lender Institutions, the
          Co-Arrangers and The Chase Manhattan Bank, as Administrative
          Agent, filed as Exhibit 10.75 on Form 10-Q, dated November
          12, 1998, is hereby incorporated by reference.
</TABLE>

                                        41
<PAGE>   44

<TABLE>
<CAPTION>
EXHIBIT
  NO.                             DESCRIPTION
-------                           -----------
<C>       <S>
10.17     MIP Deferral Plan dated as of September 1, 1998, filed as
          Exhibit 10.76 on Form 10-Q, dated November 12, 1998, is
          hereby incorporated by reference.
10.18     Open Line of Credit Application and Terms Agreement, dated
          March 5, 1999, between Federal Home Loan Bank of Des Moines
          and AmerUs Life Insurance Company, filed as Exhibit 10.34 on
          Form 10-Q dated May 14, 1999, is hereby incorporated by
          reference.
10.19     Third Waiver to Credit Agreement dated as of November 16,
          1998 to the Credit Agreement dated as of October 23, 1997
          among AmerUs Life Holdings, Inc., Various Lender
          Institutions, the Co-Arrangers and The Chase Manhattan Bank,
          as Administrative Agent, filed as Exhibit 10.37 on Form
          10-K, dated March 30, 1999, is hereby incorporated by
          reference.
10.20     Fourth Consent and Amendment, dated as of December 4, 1998
          to the Credit Agreement dated as of October 23, 1997 among
          AmerUs Life Holdings, Inc., Various Lender Institutions, the
          Co-Arrangers and The Chase Manhattan Bank, as Administrative
          Agent, filed as Exhibit 10.38 on Form 10-K, dated March 30,
          1999, is hereby incorporated by reference.
10.21     Facility and Guaranty Agreement, dated February 12, 1999,
          among The First National Bank of Chicago and AmerUs Life
          Holdings, Inc., filed as Exhibit 10.39 on Form 10-Q dated
          May 14, 1999, is hereby incorporated by reference.
10.22     Form of Reimbursement Agreement, dated February 15, 1999,
          among AmerUs Life Holdings, Inc. and Roger K. Brooks, Victor
          N. Daley, Michael G. Fraizer, Thomas C. Godlasky, Marcia S.
          Hanson, Mark V. Heitz and Gary R. McPhail, filed as Exhibit
          10.40 on Form 10-Q dated May 14, 1999, is hereby
          incorporated by reference.
10.23     Amendment No. 1 to Facility Agreement, dated March 23, 1999,
          among The First National Bank of Chicago and AmerUs Life
          Holdings, Inc., filed as Exhibit 10.41 on Form 10-Q dated
          May 14, 1999, is hereby incorporated by reference.
10.24     1999 Non-Employee Stock Option Plan, dated April 19, 1999,
          filed on Form S-3, Registration Number 333-72643, is hereby
          incorporated by reference.
10.25     Fifth Waiver and Amendment to Credit Agreement dated as of
          October 1, 1998 to the Credit Agreement dated as of October
          23, 1997 among AmerUs Life Holdings, Inc., Various Lender
          Institutions, the Co-Arrangers and The Chase Manhattan Bank,
          as Administrative Agent, filed as Exhibit 10.43 on Form 10-Q
          dated August 13, 1999, is hereby incorporated by reference.
10.26     Sixth Amendment to Credit Agreement dated as of May 18, 1999
          to the Credit Agreement dated as of October 23, 1997 among
          AmerUs Life Holdings, Inc., Various Lender Institutions, the
          Co-Arrangers and The Chase Manhattan Bank, as Administrative
          Agent, filed as Exhibit 10.44 on Form 10-Q dated August 13,
          1999, is hereby incorporated by reference.
10.27     Amendment No. 2 to Facility Agreement, dated January 25,
          2000, among The First National Bank of Chicago and the
          Registrant, filed as Exhibit 10.44 on Form 10-K, dated March
          8, 2000, is hereby incorporated by reference.
10.28     Irrevocable Standby Letter of Credit Application and Terms
          Agreement, dated February 1, 2000, between Federal Home Loan
          Bank of Des Moines and AmerUs Life Insurance Company, filed
          as Exhibit 10.45 on Form 10-K, dated March 8, 2000, is
          hereby incorporated by reference.
10.29     Seventh Amendment to Credit Agreement dated as of December
          23, 1999 to the Credit Agreement dated as of October 23,
          1997 among AmerUs Life Holdings, Inc., Various Lender
          Institutions, the Co-Arrangers and The Chase Manhattan Bank,
          as Administrative Agent, filed as Exhibit 10.46 on Form
          10-K, dated March 8, 2000, is hereby incorporated by
          reference.
</TABLE>

                                        42
<PAGE>   45

<TABLE>
<CAPTION>
EXHIBIT
  NO.                             DESCRIPTION
-------                           -----------
<C>       <S>
10.30     Investment Advisory Agreements, dated as of February 18,
          2000, by and between Indianapolis Life Insurance Company,
          Bankers Life Insurance Company of New York, IL Annuity and
          Insurance Company, Western Security Life Insurance Company
          and AmerUs Capital Management Group, Inc. filed as Exhibits
          10.1, 10.3, 10.4 and 10.2, respectively, to AmerUs Life
          Holdings, Inc.'s report on Form 8-K/A on March 6, 2000, are
          hereby incorporated by reference.
10.31     Advance, Pledge and Security Agreement, dated April 12,
          2000, by and between the Federal Home Loan Bank of Topeka
          and American Investors Life Insurance Company, Inc., filed
          as Exhibit 10.48 on Form 10-Q, dated May 15, 2000, is hereby
          incorporated by reference.
10.32     Institutional Custody Agreement, dated April 12, 2000, by
          and between the Federal Home Loan Bank of Topeka and
          American Investors Life Insurance Company, Inc., filed as
          Exhibit 10.49 on Form 10-Q, dated May 15, 2000, is hereby
          incorporated by reference.
10.33     Line of Credit Application, dated April 12, 2000, by and
          between the Federal Home Loan Bank of Topeka and American
          Investors Life Insurance Company, Inc., filed as Exhibit
          10.50 on Form 10-Q, dated May 15, 2000, is hereby
          incorporated by reference.
10.34     Stock Purchase Agreement, dated February 1, 2000, by and
          among AmVestors Financial Corporation, Creative Marketing
          International Corporation and the Stockholders of Creative
          Marketing International Corporation, filed as Exhibit 10.51
          on Form 10-Q, dated May 15, 2000, is hereby incorporated by
          reference.
10.35     Stock Purchase Agreement, dated February 23, 2000, by and
          among American Investors Sales Group, Inc., Community Bank
          Marketing, Inc. and Community Financial Services, Inc.,
          filed as Exhibit 10.52 on Form 10-Q, dated May 15, 2000, is
          hereby incorporated by reference.
10.36     Agreement for Advances, Pledge and Security Agreement, dated
          March 12, 1992, by and between Central Life Assurance
          Company and the Federal Home Loan Bank of Des Moines, filed
          as Exhibit 10.53 on Form 10-Q, dated May 15, 2000, is hereby
          incorporated by reference.
10.37     Agreement for Advances, Pledge and Security Agreement, dated
          September 1, 1995, by and between American Vanguard Life
          Insurance Company and the Federal Home Loan Bank of Des
          Moines, filed as Exhibit 10.54 on Form 10-Q, dated May 15,
          2000, is hereby incorporated by reference.
10.38     Agreement and Plan of Merger, dated September 30, 1998, by
          and among AmVestors Financial Corporation, Senior Benefit
          Services of Kansas, Inc., Senior Benefit Services Insurance
          Agency, Inc., National Senior Benefit Services, Inc. and
          Richard McCarter, filed as Exhibit 10.55 on Form 10-Q, dated
          May 15, 2000, is hereby incorporated by reference.
10.39     Eighth Amendment to Credit Agreement dated as of June 23,
          2000 to the Credit Agreement dated as of October 23, 1997
          among AmerUs Life Holdings, Inc., various Lender
          Institutions, the Co-Arrangers and The Chase Manhattan Bank,
          as Administrative Agent, filed as Exhibit 10.57 on Form
          10-Q, dated August 14, 2000, is hereby incorporated by
          reference.
10.40     Affirmation Agreement to Facility and Guaranty Agreement
          dated February 12, 1999 by American Mutual Holding Company,
          survivor of a merger with AmerUs Life Holdings, Inc. in
          favor of the Agent and the Lenders, dated September 20,
          2000, filed as Exhibit 10.58 on Form 10-Q, dated November
          14, 2000, is hereby incorporated by reference.
10.41     Amendment to Facility and Guaranty Agreement dated February
          12, 1999 among The First National Bank of Chicago and AmerUs
          Group Co., dated September 20, 2000, filed as Exhibit 10.59
          on Form 10-Q, dated November 14, 2000, is hereby
          incorporated by reference.
10.42     Acknowledgement and Assumption Agreement to Credit Agreement
          dated October 23, 1997, among American Mutual Holding
          Company and The Chase Manhattan Bank, as Administrative
          Agent for Various Lender Institutions, dated September 20,
          2000, filed as Exhibit 10.60 on Form 10-Q, dated November
          14, 2000, is hereby incorporated by reference.
</TABLE>

                                        43
<PAGE>   46

<TABLE>
<CAPTION>
EXHIBIT
  NO.                             DESCRIPTION
-------                           -----------
<C>       <S>
10.43     AmerUs Group Co. 2000 Stock Incentive Plan, dated November
          15, 2000, filed as Exhibit 99.9 to the registration
          statement of AmerUs Group Co. on Form S-8, Registration
          Number 333-50030, is hereby incorporated by reference.
12*       Computation of Ratios of Earnings to Fixed Charges.
16.1*     Letter re Change in Certifying Accountant.
21.1*     List of Subsidiaries of the Registrant.
23.1*     Consent of KPMG LLP.
99.1      Retirement Agreement, dated March 14, 2000, by and between
          Victor N. Daley and AmerUs Life Holdings, Inc., filed as
          Exhibit 99.8 on Form 10-Q, dated May 15, 2000, is hereby
          incorporated by reference.
99.2      First Amendment to Employment Agreement, dated as of April
          15, 1999, to the Employment Agreement dated as of September
          19, 1997, among Mark V. Heitz, AmVestors Financial
          Corporation, American Investors Life Insurance Company,
          Inc., AmVestors Investment Group, Inc., American Investors
          Sales Group, Inc., and AmerUs Life Holdings, Inc., filed as
          Exhibit 99.4 on Form 10-Q dated August 13, 1999, is hereby
          incorporated by reference.
99.3      Supplemental Benefit Agreement, dated as of April 15, 1999,
          among Roger K. Brooks and AmerUs Life Holdings, Inc., filed
          as Exhibit 99.5 on Form 10-Q dated August 13, 1999, is
          hereby incorporated by reference.
99.4      Form of Supplemental Benefit Agreement, dated as of April
          15, 1999, among AmerUs Life Holdings, Inc. and Victor N.
          Daley, Michael G. Fraizer, Thomas C. Godlasky and Gary R.
          McPhail, filed as Exhibit 99.6 on Form 10-Q dated August 13,
          1999, is hereby incorporated by reference.
99.5      Amended and Restated Employment Agreement, dated as of April
          15, 1999, among Marcia S. Hanson and AmerUs Life Holdings,
          Inc., filed as Exhibit 99.7 on Form 10-Q dated August 13,
          1999, is hereby incorporated by reference.
99.6      Agreement and Release, dated as of December 31, 1999, by and
          between Marcia S. Hanson, AmerUs Life Holdings, Inc.,
          Registrant, American Mutual Holding Company, and all of
          their respective subsidiaries and affiliates, filed as
          Exhibit 99.6 on Form 10-K, dated March 8, 2000, is hereby
          incorporated by reference.
99.7      Form of Supplemental Benefit Agreement, dated as of February
          7, 2000, among AmerUs Life Holdings, Inc. and Victor N.
          Daley, Michael G. Fraizer, Thomas C. Godlasky and Gary R.
          McPhail, filed as Exhibit 99.7 on Form 10-K, dated March 8,
          2000 is hereby incorporated by reference.
</TABLE>

---------------
* included herein

                                        44
<PAGE>   47

                                   SIGNATURES

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

                                          AMERUS GROUP CO.

                                          /s/ ROGER K. BROOKS
                                          --------------------------------------
                                          Roger K. Brooks
                                          Chairman, President and Chief
                                          Executive Officer

Date: March 9, 2001

                               POWER OF ATTORNEY

     We, the undersigned officers and directors of AmerUs Group Co., hereby
severally and individually constitute and appoint Michael G. Fraizer, Brenda J.
Cushing and James A. Smallenberger, and each of them, the true and lawful
attorneys and agents of each of us to execute in the name, place and stead of
each of us (individually and in any capacity stated below) any and all
amendments to this Annual Report on Form 10-K and all instruments necessary or
advisable in connection therewith and to file the same with the Securities and
Exchange Commission, each of said attorneys and agents to have the power to act
with or without the others and to have full power and authority to do and
perform in the name and on behalf of each of the undersigned every act
whatsoever necessary or advisable to be done on the premises as fully and to all
intents and purposes as any of the undersigned might or could do in person, and
we hereby ratify and confirm our signatures as they may be signed by or said
attorneys and agents or each of them to any and all such amendments and
instruments.

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated.

<TABLE>
<C>                                           <S>
           /s/ ROGER K. BROOKS                Chairman, President and Chief Executive Officer
------------------------------------------    (principal executive officer) and Director
             Roger K. Brooks

          /s/ MICHAEL G. FRAIZER              Executive Vice President and Chief Financial Officer
------------------------------------------    (principal financial officer)
            Michael G. Fraizer

          /s/ BRENDA J. CUSHING               Vice President and Controller
------------------------------------------    (principal accounting officer)
            Brenda J. Cushing

            /s/ JOHN R. ALBERS                Director
------------------------------------------
              John R. Albers

           /s/ WESLEY H. BOLDT                Director
------------------------------------------
             Wesley H. Boldt

           /s/ JOSEPH A. BORGEN               Director
------------------------------------------
             Joseph A. Borgen

           /s/ MALCOLM CANDLISH               Director
------------------------------------------
             Malcolm Candlish
</TABLE>

                                        45
<PAGE>   48
<TABLE>
<C>                                           <S>
          /s/ THOMAS F. GAFFNEY               Director
------------------------------------------
            Thomas F. Gaffney

         /s/ RALPH W. LASTER, JR.             Director
------------------------------------------
           Ralph W. Laster, Jr.

                                              Director
------------------------------------------
           John W. Norris, Jr.

            /s/ JACK C. PESTER                Director
------------------------------------------
              Jack C. Pester

                                              Director
------------------------------------------
               John A. Wing

          /s/ F. A. WITTERN, JR.              Director
------------------------------------------
            F. A. Wittern, Jr.
</TABLE>

                                        46
<PAGE>   49

                                AMERUS GROUP CO.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S>                                                             <C>
Independent Auditors' Report................................    F-2
Consolidated Balance Sheets as of December 31, 2000 and
  1999......................................................    F-3 through F-4
Consolidated Statements of Income for the Years Ended
  December 31, 2000, 1999 and 1998..........................    F-5
Consolidated Statements of Comprehensive Income for the
  Years Ended December 31, 2000, 1999 and 1998..............    F-6
Consolidated Statements of Stockholders' Equity for the
  Years Ended December 31, 2000, 1999 and 1998..............    F-7
Consolidated Statements of Cash Flows for the Years Ended
  December 31, 2000, 1999 and 1998..........................    F-8 through F-10
Notes to Consolidated Financial Statements..................    F-11 through F-50
</TABLE>

     Separate financial statements of subsidiaries not consolidated and 50% or
less owned persons accounted for by the equity method have been omitted because
they do not individually constitute a significant subsidiary.

                                       F-1
<PAGE>   50

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
  AmerUs Group Co.:

     We have audited the accompanying consolidated balance sheets of AmerUs
Group Co. and subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of income, comprehensive income, stockholders' equity,
and cash flows for each of the years in the three-year period ended December 31,
2000. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of AmerUs Group
Co. and subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States of America.

                                          [KPMG LLP]

Des Moines, Iowa
February 5, 2001

                                       F-2
<PAGE>   51

                                AMERUS GROUP CO.
                          CONSOLIDATED BALANCE SHEETS
                                ($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                                --------------------------
                                                                   2000           1999
                                                                -----------    -----------
<S>                                                             <C>            <C>
                           ASSETS
Investments:
  Securities available-for-sale at fair value (notes 2 and
     6):
     Fixed maturity securities..............................    $ 7,070,056    $ 6,680,755
     Equity securities......................................        152,903         45,268
     Short-term investments.................................         20,861            155
  Loans (note 3)............................................        534,857        608,917
  Real estate...............................................          3,226         45,757
  Policy loans..............................................        111,570        109,864
  Other investments.........................................        317,715        292,689
                                                                -----------    -----------
       Total investments....................................      8,211,188      7,783,405
Cash and cash equivalents...................................         62,460        291,788
Accrued investment income...................................         97,223         92,197
Premiums, fees and other receivables........................          2,590          9,798
Reinsurance receivables.....................................          6,529         17,535
Deferred policy acquisition costs (note 4)..................        389,187        529,663
Value of business acquired (note 5).........................        396,600        230,542
Goodwill....................................................        183,491        206,324
Property and equipment......................................         56,101         51,626
Deferred income taxes (note 7)..............................             --         76,457
Other assets................................................        449,410        357,509
Closed Block assets.........................................      1,584,357      1,412,622
Assets of discontinued operations...........................         32,386         38,241
                                                                -----------    -----------
     Total assets...........................................    $11,471,522    $11,097,707
                                                                ===========    ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-3
<PAGE>   52

                                AMERUS GROUP CO.

                          CONSOLIDATED BALANCE SHEETS
                                ($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                                --------------------------
                                                                   2000           1999
                                                                -----------    -----------
<S>                                                             <C>            <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Policy reserves and policyowner funds:
  Future life and annuity policy benefits...................    $ 7,827,841    $ 7,390,991
  Policyowner funds.........................................        320,170        282,026
                                                                -----------    -----------
                                                                  8,148,011      7,673,017
Accrued expenses and other liabilities......................        186,904        157,480
Dividends payable to policyowners...........................          3,870          2,248
Policy and contract claims..................................          6,395         12,221
Income taxes payable........................................          3,683         21,932
Deferred income taxes (note 7)..............................          5,904             --
Notes and contracts payable (note 6)........................        215,627        196,263
Closed Block liabilities....................................      1,854,652      1,756,064
Liabilities of discontinued operations......................         14,806         10,340
                                                                -----------    -----------
     Total liabilities......................................     10,439,852      9,829,565
Minority interest (note 14).................................             --        309,101
Company-obligated mandatorily redeemable preferred capital
  securities of subsidiary trusts holding solely junior
  subordinated debentures of the Company (note 6)...........        197,691        197,691
Stockholders' equity (note 11):
  Preferred Stock, no par value, 20,000,000 shares
     authorized, none issued................................             --             --
  Common Stock, no par value, 230,000,000 shares authorized:
     30,011,034 shares issued and outstanding in 2000.......         30,011             --
  Paid-in capital...........................................        809,894             --
  Accumulated other comprehensive (loss)....................        (11,164)       (78,628)
  Unearned compensation.....................................           (146)          (187)
  Unallocated ESOP shares (note 8)..........................           (683)          (797)
  Unassigned surplus (note 14)..............................             --        840,962
  Retained earnings.........................................          6,067             --
                                                                -----------    -----------
       Total stockholders' equity...........................        833,979        761,350
                                                                -----------    -----------
       Total liabilities and stockholders' equity...........    $11,471,522    $11,097,707
                                                                ===========    ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-4
<PAGE>   53

                                AMERUS GROUP CO.

                       CONSOLIDATED STATEMENTS OF INCOME
                    ($ IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                              YEARS ENDED DECEMBER 31,
                                                      -----------------------------------------
                                                         2000           1999           1998
                                                      -----------    -----------    -----------
<S>                                                   <C>            <C>            <C>
Revenues:
  Insurance premiums..............................    $    88,857    $    89,521    $    81,197
  Universal life and annuity product charges......         87,455         78,334         73,982
  Net investment income (note 2)..................        586,619        557,280        514,107
  Realized gains (losses) on investments (note
     2)...........................................         (8,620)        (2,095)           777
  Other income....................................         34,575         20,291         15,482
  Contribution from the Closed Block..............         24,503         25,166         31,478
                                                      -----------    -----------    -----------
                                                          813,389        768,497        717,023
                                                      -----------    -----------    -----------
Benefits and expenses:
  Policyowner benefits............................        451,223        446,086        431,757
  Underwriting, acquisition and other expenses....        122,052        116,367        102,098
  Reorganization costs (note 14)..................         11,265          7,062             --
  Amortization of deferred policy acquisition
     costs and value of business acquired (notes 4
     and 5).......................................         77,796         67,780         60,214
  Dividends to policyowners.......................          6,014          4,526          2,558
                                                      -----------    -----------    -----------
                                                          668,350        641,821        596,627
                                                      -----------    -----------    -----------
Income from continuing operations.................        145,039        126,676        120,396
Interest expense (note 6).........................         29,723         28,983         27,931
                                                      -----------    -----------    -----------
Income before income tax expense and minority
  interest........................................        115,316         97,693         92,465
Income tax expense (note 7).......................         42,516         33,654         29,100
Minority interest (note 14).......................         21,677         28,107         26,919
                                                      -----------    -----------    -----------
Net income from continuing operations.............         51,123         35,932         36,446
Discontinued operations (net of tax) (note 18):
  Income (loss) from discontinued operations......            717          2,504         (7,830)
  Gain on sale of discontinued operations.........             --             --         74,883
                                                      -----------    -----------    -----------
     Net income...................................    $    51,840    $    38,436    $   103,499
                                                      ===========    ===========    ===========
Net income from continuing operations per common
  share (note 15 and 20):
  Basic...........................................    $      2.44    $      2.07    $      2.10
                                                      ===========    ===========    ===========
  Diluted.........................................    $      2.43    $      2.06    $      2.07
                                                      ===========    ===========    ===========
Net income per common share:
  Basic...........................................    $      2.48    $      2.21    $      5.96
                                                      ===========    ===========    ===========
  Diluted.........................................    $      2.46    $      2.20    $      5.88
                                                      ===========    ===========    ===========
Weighted average common shares outstanding (note
  15 and 20):
  Basic...........................................     20,922,371     17,390,165     17,372,136
                                                      ===========    ===========    ===========
  Diluted.........................................     21,035,518     17,467,132     17,609,748
                                                      ===========    ===========    ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-5
<PAGE>   54

                                AMERUS GROUP CO.

                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                ($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                                                            ---------------------------------
                                                              2000        1999         1998
                                                            --------    ---------    --------
<S>                                                         <C>         <C>          <C>
Net income................................................  $ 51,840    $  38,436    $103,499
Other comprehensive income (loss), before tax
  Unrealized gains (losses) on securities
     Unrealized holding gains (losses) arising during
       period.............................................   118,615     (262,547)    (36,716)
     Less: reclassification adjustment for gains (losses)
       included in net income.............................   (15,299)      (8,529)      6,477
     Minimum pension liability adjustment.................        --        1,478      (1,478)
                                                            --------    ---------    --------
  Other comprehensive income (loss), before tax...........   133,914     (252,540)    (44,671)
  Income tax (expense) benefit related to items of other
     comprehensive income (note 7)........................   (46,870)      88,389      15,635
                                                            --------    ---------    --------
                                                              87,044     (164,151)    (29,036)
  Amounts attributable to:
     Discontinued operations..............................        --           --       1,043
     Minority interest....................................   (19,580)      69,194      17,469
                                                            --------    ---------    --------
Other comprehensive income (loss), net of taxes...........    67,464      (94,957)    (10,524)
                                                            --------    ---------    --------
Comprehensive income (loss)...............................  $119,304    $ (56,521)   $ 92,975
                                                            ========    =========    ========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-6
<PAGE>   55

                                AMERUS GROUP CO.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                                ($ IN THOUSANDS)
<TABLE>
<CAPTION>
                                                       ACCUMULATED
                                                          OTHER                      UNALLOCATED
                                 COMMON    PAID-IN    COMPREHENSIVE     UNEARNED        ESOP       UNASSIGNED   RETAINED
                                  STOCK    CAPITAL    INCOME (LOSS)   COMPENSATION     SHARES       SURPLUS     EARNINGS
                                 -------   --------   -------------   ------------   -----------   ----------   --------
<S>                              <C>       <C>        <C>             <C>            <C>           <C>          <C>
Balance at December 31, 1997...  $   --    $     --     $ 26,853         $  --          $  --      $ 696,207    $     --
1998:
Net income.....................      --          --           --            --             --        103,499          --
Net unrealized (loss) on
  securities...................      --          --      (14,492)           --             --             --          --
Stock issued under various
  incentive plans, net of
  forfeitures..................      --          --           --          (137)            --            371          --
Retirement of company-obligated
  mandatorily redeemable
  preferred capital securities
  (note 6).....................      --          --           --            --             --          1,668          --
Minority interest ownership
  changes......................      --          --        3,968            --             --           (876)         --
                                 -------   --------     --------         -----          -----      ---------    --------
Balance at December 31, 1998...  $   --    $     --     $ 16,329         $(137)         $  --      $ 800,869    $     --
1999:
Net income.....................      --          --           --            --             --         38,436          --
Net unrealized (loss) on
  securities...................      --          --      (95,147)           --             --             --          --
Stock issued under various
  incentive plans, net of
  forfeitures..................      --          --           --           (48)            --            473          --
Retirement of company-obligated
  mandatorily redeemable
  preferred capital securities
  (note 6).....................      --          --           --            --             --            205          --
Adoption of leveraged ESOP
  (note 8).....................      --          --           --            --         (1,028)            --          --
Allocation of shares in
  leveraged ESOP (note 8)......      --          --           --            --            231             74          --
Minority interest ownership
  changes......................      --          --          190            (2)            --            905          --
                                 -------   --------     --------         -----          -----      ---------    --------
Balance at December 31, 1999...  $   --    $     --     $(78,628)        $(187)         $(797)     $ 840,962    $     --
2000:
Net income.....................      --          --           --            --             --         33,801      18,039
Net unrealized gain on
  securities...................      --          --       67,641            --             --             --          --
Stock issued under various
  incentive plans, net of
  forfeitures..................       6         169           --           105             --            273          --
Dividends declared on common
  stock........................      --          --           --            --             --             --     (11,972)
Allocation of shares in
  leveraged ESOP (note 8)......      --         600           --            --            695             --          --
Minority interest ownership
  changes......................      --          --         (177)           --             (2)            94          --
Acquisition of minority
  interest (note 14)...........  12,615     285,405           --            --             --             --          --
Demutualization of AmerUs Group
  (note 14)....................  17,390     518,535           --           (64)          (579)      (875,130)         --
Other..........................      --       5,185           --            --             --             --          --
                                 -------   --------     --------         -----          -----      ---------    --------
Balance at December 31, 2000...  $30,011   $809,894     $(11,164)        $(146)         $(683)     $      --    $  6,067
                                 =======   ========     ========         =====          =====      =========    ========

<CAPTION>

                                     TOTAL
                                 STOCKHOLDERS'
                                    EQUITY
                                 -------------
<S>                              <C>
Balance at December 31, 1997...    $ 723,060
1998:
Net income.....................      103,499
Net unrealized (loss) on
  securities...................      (14,492)
Stock issued under various
  incentive plans, net of
  forfeitures..................          234
Retirement of company-obligated
  mandatorily redeemable
  preferred capital securities
  (note 6).....................        1,668
Minority interest ownership
  changes......................        3,092
                                   ---------
Balance at December 31, 1998...    $ 817,061
1999:
Net income.....................       38,436
Net unrealized (loss) on
  securities...................      (95,147)
Stock issued under various
  incentive plans, net of
  forfeitures..................          425
Retirement of company-obligated
  mandatorily redeemable
  preferred capital securities
  (note 6).....................          205
Adoption of leveraged ESOP
  (note 8).....................       (1,028)
Allocation of shares in
  leveraged ESOP (note 8)......          305
Minority interest ownership
  changes......................        1,093
                                   ---------
Balance at December 31, 1999...    $ 761,350
2000:
Net income.....................       51,840
Net unrealized gain on
  securities...................       67,641
Stock issued under various
  incentive plans, net of
  forfeitures..................          553
Dividends declared on common
  stock........................      (11,972)
Allocation of shares in
  leveraged ESOP (note 8)......        1,295
Minority interest ownership
  changes......................          (85)
Acquisition of minority
  interest (note 14)...........      298,020
Demutualization of AmerUs Group
  (note 14)....................     (339,848)
Other..........................        5,185
                                   ---------
Balance at December 31, 2000...    $ 833,979
                                   =========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-7
<PAGE>   56

                                AMERUS GROUP CO.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                ($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                               YEARS ENDED DECEMBER 31,
                                                        ---------------------------------------
                                                           2000          1999          1998
                                                        -----------   -----------   -----------
<S>                                                     <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income...........................................   $    51,840   $    38,436   $   103,499
Less: (Income) loss from discontinued operations.....          (717)       (2,504)        7,830
                                                        -----------   -----------   -----------
                                                             51,123        35,932       111,329
Adjustments to reconcile net income to net cash
  provided by operating activities:
  Policyowner assessments on universal life and
     annuity products................................       (60,467)      (58,602)      (72,482)
  Interest credited to policyowner account
     balances........................................       319,826       315,086       317,783
  Gain on sale of discontinued operations............            --            --       (97,852)
  Realized investment (gains) losses.................         8,621         2,095          (777)
  Goodwill amortization..............................         8,259         7,403         7,531
  VOBA amortization..................................        39,776        32,604        32,932
  Minority interest..................................        21,677        28,107        26,919
  Change in:
     Accrued investment income.......................        (5,026)      (10,295)        3,093
     Reinsurance receivables.........................        11,006       (11,361)           29
     Deferred policy acquisition costs...............      (155,053)     (118,078)     (117,452)
     Liabilities for future policy benefits..........        61,859       329,948       104,303
     Policy and contract claims and other policyowner
       funds.........................................        (6,326)         (291)        8,885
     Income taxes:
       Current.......................................       (18,249)       18,926       (13,815)
       Deferred......................................        20,691        14,405        (2,055)
  Other, net.........................................        99,999        94,447        (9,119)
  Change in Closed Block assets and liabilities,
     net.............................................        43,117        59,548       105,911
                                                        -----------   -----------   -----------
Net cash provided by operating activities............       440,833       739,874       405,163
                                                        -----------   -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed maturities available-for-sale......    (1,789,991)   (4,054,586)   (3,418,329)
Maturities, calls and principal reductions of fixed
  maturities available for sale......................     1,540,081     3,644,908     3,512,313
Purchase of equity securities........................      (141,532)     (214,060)     (323,670)
Proceeds from sale of equity securities..............        30,933       229,101       331,641
Change in short-term investments, net................       (22,353)       22,273        (9,833)
Purchase of loans....................................       (90,964)     (176,997)     (262,083)
</TABLE>

                                       F-8
<PAGE>   57

                                AMERUS GROUP CO.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                ($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                               YEARS ENDED DECEMBER 31,
                                                        ---------------------------------------
                                                           2000          1999          1998
                                                        -----------   -----------   -----------
<S>                                                     <C>           <C>           <C>
Proceeds from repayment and sale of loans............       202,270       208,232       144,307
Purchase of real estate and other invested assets....      (104,284)     (113,992)     (275,285)
Proceeds from sale of real estate and other invested
  assets.............................................       122,113        53,642       246,453
Proceeds from the sale of discontinued operations....            --            --       119,724
Change in policy loans, net..........................        (1,706)          922         7,079
Other assets, net....................................      (104,999)        2,698        29,910
Change in Closed Block investments, net..............       (38,577)      (54,373)      (93,364)
Purchase of minority interest........................          (969)       (8,181)     (110,622)
                                                        -----------   -----------   -----------
  Net cash (used in) investing activities............      (399,978)     (460,413)     (101,759)
                                                        -----------   -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deposits to policyowner account balances.............     1,463,076     1,023,252       855,181
Withdrawals from policyowner account balances........    (1,435,150)   (1,169,228)   (1,087,856)
Change in debt, net..................................        19,364        28,075      (119,892)
Dividends to shareholders............................       (13,240)       (5,171)       (6,494)
Issuance of company-obligated mandatorily redeemable
  capital securities.................................            --            --       144,963
Retirement of company-obligated mandatorily
  redeemable capital securities......................            --        (1,523)       (3,911)
Adoption and allocation of shares in leveraged
  ESOP...............................................         1,295        (1,250)           --
Cash paid for demutualization distribution...........      (306,168)           --            --
Other, net...........................................           640            --        (5,936)
                                                        -----------   -----------   -----------
     Net cash provided by (used in) financing
       activities....................................      (270,183)     (125,845)     (223,945)
                                                        -----------   -----------   -----------
     Net increase (decrease) in cash.................      (229,328)      153,616        79,459
Cash and cash equivalents at beginning of period.....       291,788       138,172        58,713
                                                        -----------   -----------   -----------
Cash and cash equivalents at end of period...........   $    62,460   $   291,788   $   138,172
                                                        ===========   ===========   ===========
SUPPLEMENTAL DISCLOSURE OF CASH ACTIVITIES:
Interest paid........................................   $    39,415   $    31,998   $    31,077
                                                        ===========   ===========   ===========
Income taxes paid....................................   $     4,043   $     6,137   $    21,492
                                                        ===========   ===========   ===========
</TABLE>

                                       F-9
<PAGE>   58

                                AMERUS GROUP CO.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                ($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                            ----------------------------------
                                                               2000         1999        1998
                                                            ----------   ----------   --------
<S>                                                         <C>          <C>          <C>
Supplemental disclosure of noncash investing and
  financing activities:
  Sale of subsidiaries for notes and accounts
     receivable..........................................   $       --   $       --   $125,527
                                                            ==========   ==========   ========
Details of acquisitions:
  Minority interest ownership in assets acquired.........   $4,750,145   $       --   $     --
  Minority interest ownership of liabilities assumed.....    4,499,238           --         --
                                                            ----------   ----------   --------
  Fair value of minority interest acquired...............      250,907           --         --
  Allocation of excess costs of acquiring the minority
     interest over the fair value of identifiable assets
     less liabilities....................................       47,113           --         --
                                                            ----------   ----------   --------
  Value of common stock issued to acquire minority
     interest............................................   $  298,020   $       --   $     --
                                                            ==========   ==========   ========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-10
<PAGE>   59

                                AMERUS GROUP CO.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

     AmerUs Group Co. (Company) is a holding company engaged through its
subsidiaries in the business of marketing, underwriting and distributing a broad
range of individual life insurance and annuity products to individuals and
businesses in 49 states, the District of Columbia and the U.S. Virgin Islands.
The Company also owns a real estate management company in which it conducts
limited real estate management, development, syndication and marketing
activities. The Company has two reportable operating segments: Life Insurance
and Annuities. The Life Insurance segment's primary product offerings consist of
whole life, universal life and term life insurance policies. The primary product
offerings of the Annuity segment are fixed annuities.

     The Company sold certain lines of business and made the decision to exit
certain other businesses in 1998. These businesses are referred to as
discontinued operations and include the following activities: banking,
residential real estate brokerage, residential land development, and mortgage
banking.

REORGANIZATION

     The Company was formerly known as American Mutual Holding Company (AMHC)
and was a mutual insurance holding company whose principal asset was a 58%
interest in AmerUs Life Holdings, Inc. (ALHI). Public stockholders owned the
remaining 42% interest in ALHI (Minority Interest). ALHI was a holding company
which directly or indirectly owned three principal life insurance subsidiaries:
AmerUs Life Insurance Company (AmerUs), American Investors Life Insurance
Company, Inc. (American) and Delta Life and Annuity Company (Delta Life). On
September 20, 2000, AMHC converted to stock form, changed its name to AmerUs
Group Co. and acquired the Minority Interest of ALHI by issuing AmerUs Group Co.
common stock in exchange for the outstanding shares of ALHI held by the public.
The value of the stock exchange was approximately $298 million and ALHI merged
into the Company simultaneously with the stock exchange.

     Prior to the conversion of the Company to a stock form, the Company was
owned by individuals and entities who held insurance policies or annuity
contracts issued by AmerUs (Members). In the conversion, which is referred to as
a "demutualization", the Company distributed cash, policy credits and its newly
issued common stock to its Members in exchange for their membership interests.
The value of the distribution totaled approximately $792 million.

     The acquisition of the ALHI Minority Interest by the Company was accounted
for as a purchase and accordingly 42% of the book value of the assets and
liabilities of ALHI were adjusted to market value as of the acquisition date.
Approximately 42% of the ALHI earnings for the reporting periods up to the
acquisition date are reduced from the Company's results of operations on the
line titled "Minority interest" on the Company's Consolidated Statements of
Income. From the acquisition date forward, the Company's results of operations
include 100% of these earnings.

CONSOLIDATION AND BASIS OF PRESENTATION

     The accompanying consolidated financial statements of the Company and its
wholly-owned subsidiaries have been prepared in conformity with Generally
Accepted Accounting Principles (GAAP) which, as to the insurance company
subsidiaries, differ from statutory accounting practices prescribed or permitted
by regulatory authorities.

     The accompanying consolidated financial statements include the accounts and
operations of the Company and its wholly-owned subsidiaries, principally,
AmerUs, AmVestors Financial Corporation (AmVestors), Delta Life Corporation
(Delta), AmerUs Capital Management Group, Inc. (ACM) and

                                       F-11
<PAGE>   60
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

AmerUs Properties, Inc. (API). All significant intercompany transactions and
balances have been eliminated in consolidation.

     The preparation of consolidated financial statements in conformity with
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

     Certain balances for 1998 and 1999 have been reclassified to conform to the
2000 presentation format.

CASH AND CASH EQUIVALENTS

     For purposes of reporting cash flows, the Company includes cash and amounts
due from other financial institutions and interest-bearing deposits in other
financial institutions purchased with original maturities of three months or
less in cash and cash equivalents. Amounts of interest-bearing deposits included
as cash equivalents at December 31, 2000 and 1999 were $85.4 million and $317.5
million, respectively.

CLOSED BLOCK

     The Closed Block was established on June 30, 1996 in connection with the
reorganization of AmerUs to a stock form. Insurance policies which had a
dividend scale in effect as of June 30, 1996, were included in the Closed Block.
The primary products included in the Closed Block are whole life, certain
universal life policies and term life insurance policies. The Closed Block was
designed to give reasonable assurance to owners of affected policies that assets
will be available to support such policies, including maintaining dividend
scales in effect at the time of the reorganization, if the experience underlying
such scales continues. The assets, including revenue therefrom, allocated to the
Closed Block will accrue solely to the benefit of the owners of policies
included in the Closed Block until the Closed Block is no longer in effect. The
Company will not be required to support the payment of dividends and interest
credits on the Closed Block policies from its general funds, although it could
choose to provide such support. The Company will continue to pay guaranteed
benefits under all policies, including policies included in the Closed Block, in
accordance with their terms. In the event that the Closed Block assets were
insufficient to meet the benefits of the Closed Block guaranteed benefits,
general assets would be utilized to meet the contractual benefits of the Closed
Block policyholders.

     The estimated net cash flows assumed in determining the Closed Block
funding consist of premiums from policies included in the Closed Block,
investment income from Closed Block assets, proceeds from maturities and
dispositions of Closed Block assets, less benefits paid on Closed Block
policies, certain expenses funded in the Closed Block, and dividends on Closed
Block policies based on current payable dividend scales. To the extent that the
actual cash flows from the assets allocated to the Closed Block are, in the
aggregate, more favorable than assumed in establishing the Closed Block, total
dividends paid to the Closed Block policyholders in future years will be greater
than the total dividends that would have been paid to such policyholders if the
current payable dividend scales had been continued. Conversely, to the extent
that the actual cash flows from the assets allocated to the Closed Block are, in
the aggregate, less favorable than assumed in establishing the Closed Block,
total dividends paid to the Closed Block policyholders in future years will be
less than the total dividends that would have been paid to such policyholders if
the current payable dividend scales had been continued.

     The financial information of the Closed Block, while prepared on a GAAP
basis, reflects its contractual provisions and not its actual results of
operations and financial position. Closed Block underwriting, acquisition and
insurance expenses include premium taxes and guarantee fund assessments. All
other underwriting, acquisition and insurance expenses related to the Closed
Block operations are charged to operations outside the Closed Block;
accordingly, the contribution from the Closed Block does not represent the
actual profitability of the Closed Block operations. Operating costs and
expenses outside of the Closed Block are,

                                       F-12
<PAGE>   61
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

therefore, disproportionate to the business outside of the Closed Block.
Unrealized gains and losses on investments are included outside of the Closed
Block as a component of other comprehensive income and will be included in the
Closed Block operations upon their realization. Unrealized gains and losses are
not included in the determination of the policyholder obligation.

     Summarized financial information of the Closed Block as of December 31,
2000, 1999 and 1998 and for the years ended December 31, 2000, 1999 and 1998, is
as follows (in thousands):

<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                          --------------------------------------
                                                             2000          1999          1998
                                                          ----------   ------------   ----------
<S>                                                       <C>          <C>            <C>
ASSETS:
Securities available for sale at fair value
Fixed maturity securities (amortized cost
  2000 -- $1,182,324; 1999 -- $1,133,717;
  1998 -- $1,074,208)...................................  $1,191,592    $1,087,672    $1,116,540
  Short-term investments................................          --            --         8,875
Policy loans............................................     201,092       188,035       181,866
Other investments.......................................       2,934           602         3,027
Cash and cash equivalents...............................       3,025         5,910             4
Accrued investment income...............................      16,811        14,949        14,445
Premiums and fees receivable............................       7,062           957         3,385
Deferred policy acquisition costs.......................      48,126        97,141       117,479
Value of business acquired..............................      71,830            --            --
Other assets............................................      41,885        17,356         7,684
                                                          ----------    ----------    ----------
     Total Assets.......................................  $1,584,357    $1,412,622    $1,453,305
                                                          ==========    ==========    ==========
LIABILITIES:
Future life and annuity policy benefits.................  $1,654,784    $1,581,923    $1,517,162
Policyowner funds.......................................       5,081         8,905         6,350
Accrued expenses and other liabilities..................      34,689         7,582        21,801
Dividends payable to policyowners.......................     154,603       152,984       149,487
Policy and contract claims..............................       5,495         4,670         8,395
                                                          ----------    ----------    ----------
     Total Liabilities..................................  $1,854,652    $1,756,064    $1,703,195
                                                          ==========    ==========    ==========
REVENUES AND EXPENSES:
Insurance premiums......................................  $  185,350    $  189,444    $  198,178
Universal life and annuity product charges..............      12,485        12,463        13,695
Net investment income...................................     112,906       108,117       115,762
Realized gains (losses) on investments..................        (695)         (380)       10,324
Policyowner benefits....................................    (200,850)     (193,482)     (200,783)
Underwriting, acquisition and other expenses............      (1,415)       (4,408)       (5,042)
Amortization of deferred policy acquisition costs and
  value of business acquired............................     (14,954)      (20,337)      (26,286)
Dividends to policyowners...............................     (68,324)      (66,251)      (74,370)
                                                          ----------    ----------    ----------
Contribution from the Closed Block before income
  taxes.................................................  $   24,503    $   25,166    $   31,478
                                                          ==========    ==========    ==========
</TABLE>

INVESTMENTS

     Investments in fixed maturity securities, equity securities and short-term
investments that are to be held for indefinite periods of time are reported as
securities available-for-sale. Securities available-for-sale are reported in the
accompanying consolidated financial statements at fair value. Any valuation
changes resulting

                                       F-13
<PAGE>   62
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

from changes in the fair value of these securities are reflected as a component
of stockholders' equity, except for certain policies of Delta Life which have
specific investments identified and for which valuation changes and related
unrealized gains and losses are included in future life and annuity policy
benefits. These unrealized gains or losses in stockholders' equity, excluding
certain Delta Life unrealized gains or losses as described above, are reported
net of taxes and adjustments to deferred policy acquisition costs and value of
business acquired. Premiums and discounts on fixed maturity securities are
amortized or accreted over the life of the related security as an adjustment to
yield using the effective interest method. For loan-backed and structured
securities included in fixed maturity securities, income is recognized using a
constant effective yield based on currently anticipated prepayments.

     Loans and other long-term investments are stated at cost less amortized
discounts and allowances for possible losses. Policy loans are stated at their
aggregate unpaid balances. Investments in loans and real estate are considered
impaired when the Company determines that collection of all amounts due under
the contractual terms is doubtful or carrying values exceed the fair value of
underlying collateral. The Company adjusts such assets to their estimated net
realizable value at the point at which it determines an impairment is other than
temporary. Interest income on impaired mortgage loans is recognized when cash is
received. In addition, the Company has established a valuation allowance for
loans, real estate, and other invested assets. Valuation allowances for other
than temporary impairments in value are netted against the asset categories to
which they apply, and additions to valuation allowances are included in total
investment results.

     Real estate is stated at cost less accumulated depreciation. Depreciation
is calculated over the estimated useful lives using primarily accelerated
depreciation methods.

     The Company has one $250 million separate account funding agreement. Under
this agreement, a five-year floating rate insurance contract is issued to a
commercial paper conduit. The funding agreement is secured by assets in the
Company's separate account and is further backed by the general account assets.
The separate account assets are legally segregated and are not subject to claims
that arise out of any other business of the Company. The separate account assets
and liabilities are included with general account assets in the financial
statements. The funding agreement may not be cancelled by the commercial paper
conduit unless there is a default under the agreement, but the Company may
terminate at any time.

     Investments in partnerships and joint ventures in which the Company's
ownership percentage exceeds 3% are generally accounted for under the equity
method whereby the Company initially records the investment at cost.
Subsequently, the Company increases or decreases the carrying amount of the
investment for its shares of income or loss, respectively, of the investee.
Investments in partnerships and joint ventures in which the Company's ownership
percentage is less than 3% are generally accounted for under the cost method
whereby dividends received by the investee are recognized as income. The Company
is primarily a limited partner in such investments. These investments are shown
as other investments and totaled approximately $99.5 million and $104.8 million
at December 31, 2000 and 1999.

     Realized gains and losses are included in earnings and are determined using
the specific identification method. The carrying value of investments is reduced
to its estimated realizable value if a decline in fair value is considered other
than temporary with such reduction charged to earnings.

LOANS

     Loans are stated at the principal amounts outstanding, net of unearned
income, deferred loan fees, discounts, and allowances for possible losses.
Unearned income, net deferred loan fees, premiums, and discounts on loans which
are probable of collection are amortized over the terms of the loans using a
method that approximates the interest method. A loan is considered impaired if
it is probable that contractual amounts due will not be collected. Impaired
loans are valued at the fair value of the underlying collateral. Accrued
interest receivable in arrears which management believes is doubtful of
collection is charged against income.

                                       F-14
<PAGE>   63
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Subsequent interest income is not recognized on such loans until collected or
until determined by management to be collectible.

INTEREST RATE SWAPS, CAPS, SWAPTIONS AND OPTIONS

     The Company uses interest rate swaps, caps, swaptions and options as part
of its overall interest rate risk management strategy for certain life insurance
and annuity products. The book values of the underlying hedged investments or
anticipated investment transactions are amortized over the remaining lives of
the hedged investments as adjustments to investment income. Certain agreements
hedge assets which are carried at fair value; accordingly, such underlying
hedged investments are also carried at fair value. Any unamortized gains or
losses are recognized when the underlying investments are sold. These
investments are included in other investments.

     Interest rate swap contracts are used to convert the interest rate
characteristics (fixed or variable) of certain investments to match those of the
related insurance liabilities that the investments are supporting. The net
interest effect of such swap transactions is reported as an adjustment of
interest income as incurred.

     Interest rate caps are used to limit the effects of changing interest rates
on yields of variable rate or short-term assets or liabilities. The initial cost
of any such agreement is amortized to investment income over the life of the
agreement. Periodic payments that are receivable as a result of the agreements
are accrued as an adjustment of investment income.

     Swaption agreements are used in conjunction with interest rate caps to
protect against rising rates. Swaption agreements involve the right to enter
into a swap transaction at a pre-specified price. The initial cost of a swaption
agreement is amortized to investment income over the life of the agreement.

     The Company has equity-indexed annuity products that guarantee the return
of principal to the customer and credits interest based on a percentage of the
gain in the S&P 500 Index(R). A portion of the premium from each customer is
invested in investment grade fixed income securities to cover the minimum
guaranteed value due the customer at the end of the term. A portion of the
premium is used to purchase S&P 500 call options to hedge the growth in interest
credited to the customer as a direct result of increases in the S&P 500
Index(R). The amounts to be paid or received pursuant to these agreements are
accrued and recognized in income over the life of the agreements. The initial
cost of an option agreement is amortized to income over the life of the
agreement.

POLICY ACQUISITION COSTS

     Certain commissions, policy issue and underwriting costs, and other
variable costs incurred to acquire or renew traditional life insurance,
universal life insurance, and annuity products have been deferred. The method of
amortizing deferred policy acquisition costs for traditional life insurance
products varies, dependent upon whether the contract is participating or
non-participating. Participating contracts are those which are expected to pay
dividends to policyowners in proportion to their relative contribution to the
Company's statutory surplus. Deferred policy acquisition costs for participating
traditional life insurance are generally amortized over the life of the policies
in proportion to the present value of estimated gross margins. Non-participating
traditional life insurance deferred policy acquisition costs are amortized over
the premium-paying period of the related policies in proportion to the ratio of
annual premium revenues to total anticipated premium revenues using assumptions
consistent with those used in computing policy benefit reserves. For universal
life insurance and annuity products, deferred policy acquisition costs are
generally amortized in proportion to the present value of estimated gross
margins from surrender charges and investment, mortality, and expense margins.
The amortization for participating traditional life, universal life, and annuity
products is adjusted retrospectively when current or estimated future gross
margins on the underlying policies vary from previous estimates. The

                                       F-15
<PAGE>   64
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

deferred policy acquisition cost asset is adjusted for the impact on estimated
gross profits of net unrealized gains and losses on securities.

VALUE OF BUSINESS ACQUIRED

     Value of Business Acquired (VOBA) from insurance companies acquired
represents the portion of the purchase price allocated to the right to receive
future cash flows from insurance contracts existing at the date of the
acquisition. This cost of policies purchased represents the actuarially
determined present value of the projected future cash flows from the acquired
policies.

     The expected future cash flows used in determining such value are based on
actuarially determined projections of future premium receipts, mortality,
surrenders, operating expenses, changes in insurance liabilities, investment
yields on the assets retained to support the policy liabilities and other
factors. These projections take into account all factors known or expected at
the valuation date, based on the judgment of management. The actual experience
on purchased business may vary from projections due to differences in renewal
premium, investment spread, investment gains or losses, mortality and morbidity
costs and other factors.

     The discount rate used to determine the value of policies purchased is the
rate of return required in order to invest in the business being acquired.
Factors in determining this rate include the cost of capital required to fund
the acquisition; the acquired company's compatibility with other Company
activities that may impact future cash flows; the complexity of the acquired
company; and recent discount rates used by others to determine valuations to
acquire similar blocks of business.

     VOBA is amortized based on the incidence of the expected cash flows using
the interest rate credited to the underlying policies. If cash flows differ from
expectations, the amortization of the VOBA is adjusted. The VOBA asset is
adjusted for the impact on estimated gross profits of net unrealized gains and
losses on securities. Each year, the recoverability of the VOBA is evaluated and
if the evaluation indicates that the existing insurance liabilities, together
with the present value of future net cash flows from the blocks of business
acquired, is insufficient to recover the VOBA, the difference is charged to
expense as an additional write-off of the VOBA.

GOODWILL

     Goodwill represents the excess of the amount paid to acquire a company over
the fair value of its net assets. Goodwill is amortized on a straight-line basis
over a thirty year period. The value of goodwill is monitored based on the
estimates of future earnings. If it is determined that future earnings do not
support the recoverability of goodwill, its carrying value is reduced by a
corresponding charge to expense.

RECOGNITION OF REVENUES

     Premiums for traditional life insurance products (including those products
with fixed and guaranteed premiums and benefits and which consist principally of
whole life insurance policies and certain annuities with life contingencies) are
recognized as revenues when due. For limited payment life insurance policies,
premiums are recorded as income when due with any excess profit deferred and
recognized over the expected lives of the contracts. Amounts received as
payments for universal life insurance policies and for annuity products
(including deferred annuities and annuities without life contingencies) are not
recorded as premium revenue. Revenues for such contracts consist of policy
charges for the cost of insurance, policy administration charges, and surrender
charges assessed against policyowner account balances during the period. All
insurance-related revenue is reported net of reinsurance ceded.

     Gains resulting from the sale of real estate inventory are recognized when
the Company receives a sufficient downpayment and the buyer is required to
maintain a continuing investment in the property. When
                                       F-16
<PAGE>   65
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

these conditions are not satisfied, the gain on the sale of real estate is
deferred and recognized over the life of the related receivable. Revenues
resulting from rental of property are recorded as income on the accrual basis.

FUTURE POLICY BENEFITS

     The liability for future policy benefits for traditional life insurance is
computed using the net level method, utilizing the guaranteed interest and
mortality rates used in calculating cash surrender values as described in the
contracts. Reserve interest assumptions range from 2.00 percent to 7.50 percent.
The weighted average assumed interest rate for all traditional life policy
reserves was 4.35 percent in 2000, 4.33 percent in 1999 and 4.30 percent in
1998. Policy benefit claims are charged to expense in the period that the claims
are incurred. All insurance-related benefits, losses, and expenses are reported
net of reinsurance ceded.

     Future policy benefit reserves for universal life insurance and annuity
products are computed under a retrospective deposit method and represent policy
account balances before applicable surrender charges. Policy benefits and claims
that are charged to expense include benefit claims incurred in the period in
excess of related policy account balances. The weighted average interest
crediting rates for universal life products were 5.62 percent in 2000, 5.67
percent in 1999 and 6.08 percent in 1998. The range of interest crediting rates
for annuity products, excluding bonus interest payouts, was 4.00 to 7.16 percent
in 2000, 1999 and 1998.

PARTICIPATING POLICIES

     Participating policies entitle the policyowners to receive dividends based
on actual interest, mortality, morbidity, and expense experience for the related
policies. These dividends are distributed to the policyowners through an annual
dividend using current dividend scales which are approved by the board of
directors. Nearly 100 percent of traditional life policies are currently paying
dividends and traditional life policies represent approximately 65 percent of
the Company's individual life policies in force (based on face amounts).

PROPERTY AND EQUIPMENT

     Property and equipment is recorded at cost and is depreciated principally
under the straight-line method.

STOCK-BASED COMPENSATION

     The Company accounts for stock based compensation in accordance with APB
Opinion 25 in its consolidated financial statements and has disclosed proforma
net income and earnings per share information as required by Statement of
Financial Accounting Standards (SFAS) 123, "Accounting for Stock-Based
Compensation."

GUARANTY FUND ASSESSMENTS

     The Company is subject to insurance guaranty laws in the states in which it
writes business. These laws provide for assessments against insurance companies
for the benefit of policyowners and claimants in the event of insolvency of
other life insurance companies. As of December 31, 2000, the Company has accrued
for the gross amount of guaranty fund assessments for known insolvencies net of
estimated recoveries of premium tax offsets.

BENEFIT PLAN COSTS

     The Company accounts for its pension benefits and other post retirement
benefits other than pensions, including medical and life insurance, using the
full accrual method.

                                       F-17
<PAGE>   66
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INCOME TAXES

     The Company and its non-life insurance subsidiaries file a consolidated
federal income tax return. The life insurance subsidiaries file separate federal
income tax returns. The separate return method is used to compute the Company's
provision for federal income taxes. Deferred income tax assets and liabilities
are determined based on differences among the financial reporting and tax bases
of assets and liabilities and are measured using the enacted tax rates and laws.

EARNINGS PER SHARE

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

TREASURY STOCK

     The Company accounts for its treasury stock using the par value method.
Shares purchased for treasury are not retired and are reissued as needed.

EMERGING ACCOUNTING MATTERS

SFAS 133, 137 AND 138

     In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS
No. 133 defines derivative instruments and provides comprehensive accounting and
reporting standards for the recognition and measurement of derivative and
hedging activities (including certain instruments embedded in other contracts).
It requires derivatives to be recorded in the consolidated balance sheet at fair
value and establishes criteria for hedges of changes in the fair value of
assets, liabilities or firm commitments, hedges of variable cash flows or
forecasted transactions, and hedges of foreign currency exposures of net
investments in foreign operations. Changes in the fair value of derivatives not
meeting specific hedge accounting criteria would be recognized in the
consolidated statement of operations. In June 1999, the FASB issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities -- Deferral
of the Effective Date of FASB Statement No. 133." SFAS No. 137 delays the
effective date of SFAS No. 133 for all fiscal quarters until fiscal years
beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138
"Accounting for Certain Derivative Instruments and Certain Hedging Activities,
an amendment of FASB Statement No. 133." SFAS No. 138 addresses a limited number
of Statement 133 implementation issues, including expanding normal purchase and
normal sale exceptions, redefining specific risks that can be identified as
hedged risks and defining certain other provisions related to foreign-currency
and intercompany derivatives. SFAS No. 138 is effective for fiscal years
beginning after June 15, 2000. The Company has determined that the transition
adjustments resulting from the adoption of this statement will be approximately
a $7 million reduction in net income and a $3 million increase in accumulated
other comprehensive income.

SFAS 140

     In September 2000, the FASB issued SFAS No. 140 "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities." SFAS No.
140 replaces SFAS No. 125 with the same title. It revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures, but it carries over most of SFAS
No. 125's provisions without reconsideration. SFAS No. 140 is effective for
transfers and servicing of financial assets and extinguishment of liabilities
occurring after March 31, 2001 and for recognition and reclassification of
collateral and for disclosures relating to securitization transactions and
collateral for fiscal years ending after December 15,

                                       F-18
<PAGE>   67
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2000. The Company has evaluated SFAS No. 140 and determined there to be no
material impact on the Consolidated Financial Statements.

SOP 00-3

     In December 2000, the Accounting Standards Executive Committee issued
Statement of Position 00-3 (SOP 00-3) "Accounting by Insurance Enterprises for
Demutualizations and Formations of Mutual Holding Companies and for Certain
Long-Duration Participating Contracts," which has been cleared by the FASB. SOP
00-3 provides guidance on accounting by insurance enterprises for
demutualizations and the formation of mutual insurance holding companies. It
specifies the financial statement presentation of a closed block, the accounting
for participating contracts, the accounting for expenses related to a
demutualization and formation of a mutual insurance holding company, the
accounting for retained earnings and other comprehensive income at the date of
demutualization and the formation of a mutual insurance holding company, and the
accounting for a distribution from a mutual insurance holding company to its
members. SOP 00-3 is effective no later than the end of the fiscal year that
begins after December 15, 2000. The Company has evaluated SOP 00-3 and has
adopted the guidance on accounting for demutualization expenses as of December
31, 2000. The remainder of the provisions of the SOP will require the Company to
modify its presentation of the Closed Block in its Consolidated Financial
Statements to no longer show the operations of the Closed Block and the assets
and liabilities of the Closed Block as single line items. In addition, the SOP
will require the Company to report unrealized gains and losses on Closed Block
investments as a component of the Closed Block policyholder dividend obligation
rather than accumulated other comprehensive income. At December 31, 2000, this
change would have resulted in a $6.0 million reduction in accumulated other
comprehensive income.

STATUTORY ACCOUNTING CODIFICATION

     The NAIC has codified statutory accounting practices, which are expected to
constitute the only source of prescribed statutory accounting practices and are
effective January 1, 2001. Codification will change prescribed statutory
accounting practices and may result in changes to the accounting practices that
insurance enterprises use to prepare their statutory financial statements. The
states of Iowa and Kansas have adopted the NAIC's codification without
exception. The Company has determined the impact of adopting the NAIC
codification on its statutory financial statements will be an increase to
statutory surplus of approximately $25 million.

BUSINESS RISKS

     The Company operates in a business environment which is subject to various
risks and uncertainties. Such risks and uncertainties include interest rate
risk, legal and regulatory changes and default risk.

     Interest rate risk is the potential for interest rates to change, which can
cause fluctuations in the value of investments. To the extent that fluctuations
in interest rates cause the duration of assets and liabilities to differ, the
Company may have to sell assets prior to their maturity and realize losses.
Interest rate exposure for the investment portfolio is managed through
asset/liability management techniques which attempt to match the duration of the
assets with the estimated duration of the liabilities. The Company also utilizes
derivative investment contracts to manage interest rate risk.

     The potential also exists for changes in the legal or regulatory
environment in which the Company operates, which can create additional costs and
expenses not anticipated by the Company in pricing its products. In other words,
regulatory initiatives or new legal theories may create costs for the Company
beyond those recorded in the financial statements. The Company mitigates this
risk by operating in a geographically diverse area, which reduces its exposure
to any single jurisdiction, closely monitoring the regulatory

                                       F-19
<PAGE>   68
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

environment to anticipate changes and by using underwriting practices which
identify and minimize the potential adverse impact of this risk.

     Default risk is the risk that issuers of securities owned by the Company
may default or that other parties, including reinsurers, may not be able to pay
amounts due the Company. The Company attempts to minimize this risk by adhering
to a conservative investment strategy, holding a well diversified portfolio of
assets to minimize concentrations, maintaining sound reinsurance and credit and
collection policies and providing allowances or reserves for any amounts deemed
uncollectible.

(2) INVESTMENTS

     The Company's investments at December 31, 2000 and 1999 classified as
available-for-sale securities are summarized as follows:

<TABLE>
<CAPTION>
                                                                        2000
                                                  -------------------------------------------------
                                                                 GROSS        GROSS
                                                  AMORTIZED    UNREALIZED   UNREALIZED      FAIR
                                                     COST        GAINS        LOSSES       VALUE
                                                  ----------   ----------   ----------   ----------
                                                                  ($ IN THOUSANDS)
<S>                                               <C>          <C>          <C>          <C>
Fixed maturity securities available-for-sale:
  Corporate bonds..............................   $4,384,979    $ 72,069     $ 97,724    $4,359,324
  U.S. government bonds........................      464,984      12,448          632       476,800
  State and political subdivisions.............       46,494         770            1        47,263
  Foreign government bonds.....................      152,472       2,492        3,931       151,033
  Asset-backed bonds...........................      539,258       4,609       21,145       522,722
  Mortgage-backed bonds........................    1,307,936      15,351        6,250     1,317,037
  Redeemable preferred stock...................      205,794         905       10,822       195,877
                                                  ----------    --------     --------    ----------
     Total fixed maturities
       available-for-sale......................   $7,101,917    $108,644     $140,505    $7,070,056
                                                  ==========    ========     ========    ==========
Equity securities available-for-sale...........   $  152,835    $    816     $    748    $  152,903
                                                  ==========    ========     ========    ==========
Short-term investments available-for-sale......   $   22,508    $     20     $  1,667    $   20,861
                                                  ==========    ========     ========    ==========
</TABLE>

<TABLE>
<CAPTION>
                                                                        1999
                                                  -------------------------------------------------
                                                                 GROSS        GROSS
                                                  AMORTIZED    UNREALIZED   UNREALIZED      FAIR
                                                     COST        GAINS        LOSSES       VALUE
                                                  ----------   ----------   ----------   ----------
                                                                  ($ IN THOUSANDS)
<S>                                               <C>          <C>          <C>          <C>
Fixed maturity securities available-for-sale:
  Corporate bonds..............................   $3,903,988    $ 18,332     $212,372    $3,709,948
  U.S. government bonds........................      360,808          44       11,679       349,173
  State and political subdivisions.............       47,208          --        1,761        45,447
  Foreign government bonds.....................      157,460       6,078        4,175       159,363
  Asset-backed bonds...........................      660,399          32       47,899       612,532
  Mortgage-backed bonds........................    1,608,846       3,382       58,780     1,553,448
  Redeemable preferred stock...................      267,795       5,144       22,095       250,844
                                                  ----------    --------     --------    ----------
     Total fixed maturities
       available-for-sale......................   $7,006,504    $ 33,012     $358,761    $6,680,755
                                                  ==========    ========     ========    ==========
Equity securities available-for-sale...........   $   44,371    $  1,735     $    838    $   45,268
                                                  ==========    ========     ========    ==========
Short-term investments available-for-sale......   $      155    $     --     $     --    $      155
                                                  ==========    ========     ========    ==========
</TABLE>

                                       F-20
<PAGE>   69
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The amortized cost and estimated fair value of investments in fixed
maturity securities at December 31, 2000, are summarized by stated maturity as
follows:

<TABLE>
<CAPTION>
                                                                AMORTIZED        FAIR
                                                                   COST         VALUE
                                                                ----------    ----------
                                                                    ($ IN THOUSANDS)
<S>                                                             <C>           <C>
Fixed maturities available-for-sale:
  Due in 2001...............................................    $  154,509    $  154,577
  Due in 2002 -- 2006.......................................     2,566,456     2,570,175
  Due in 2007 -- 2011.......................................     1,642,418     1,613,369
  Due after 2011............................................     1,430,598     1,414,898
  Mortgage-backed securities................................     1,307,936     1,317,037
                                                                ----------    ----------
                                                                $7,101,917    $7,070,056
                                                                ==========    ==========
</TABLE>

     The foregoing data is based on the stated maturities of the securities.
Actual maturities will differ for some securities because borrowers may have the
right to call or prepay obligations with or without call or prepayment
penalties.

     The ratings of the Company's fixed maturity securities at December 31, 2000
are summarized as follows:

<TABLE>
<CAPTION>
                                                                ($ IN THOUSANDS)
                                                                ----------------
<S>                                                             <C>
Treasuries and AAA..........................................       $2,515,149
AA..........................................................          545,663
A...........................................................        1,829,189
BBB.........................................................        1,656,277
BB..........................................................          379,235
Less than BB................................................          144,543
                                                                   ----------
                                                                   $7,070,056
                                                                   ==========
</TABLE>

     Ratings are those assigned primarily by Standard & Poor's when available,
with remaining ratings as assigned by Moody's and converted to a generally
comparable Standard & Poor's rating. Bonds not rated by either organization are
included based on the rating prescribed by the Securities Valuation Office of
the National Association of Insurance Commissioners (NAIC). NAIC Class 1 is
considered equivalent to an A or higher rating; Class 2, BBB; Class 3, BB; and
Classes 4-6, less than BB.

     Major categories of investment income are summarized as follows:

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                               ------------------------------
                                                                 2000       1999       1998
                                                               --------   --------   --------
                                                                      ($ IN THOUSANDS)
<S>                                                            <C>        <C>        <C>
Fixed maturity securities...................................   $515,598   $490,123   $456,174
Equity securities...........................................      7,795      2,379      3,994
Loans.......................................................     43,527     56,002     47,528
Real estate.................................................         36      1,528      4,695
Policy loans................................................      6,082      6,580      6,632
Other.......................................................     24,568      9,981      4,467
                                                               --------   --------   --------
Gross investment income.....................................    597,606    566,593    523,490
Investment expenses.........................................     10,987      9,313      9,383
                                                               --------   --------   --------
Net investment income.......................................   $586,619   $557,280   $514,107
                                                               ========   ========   ========
</TABLE>

                                       F-21
<PAGE>   70
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Realized gains and losses on investments and provisions for loan losses are
summarized as follows:

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                         ----------------------------------------
                                                           2000            1999            1998
                                                         --------    ----------------    --------
                                                                     ($ IN THOUSANDS)
<S>                                                      <C>         <C>                 <C>
Securities available-for-sale
  Fixed maturity securities
     Gross realized gains..............................  $ 33,078        $ 57,194        $ 45,897
     Gross realized losses.............................   (51,301)        (44,944)        (32,003)
  Equity securities
     Gross realized gains..............................         1           3,841           7,800
     Gross realized losses.............................    (1,492)        (18,296)         (7,771)
Other investments......................................     8,869          (4,287)         (2,772)
Provision for loan losses..............................     2,225           4,397         (10,374)
                                                         --------        --------        --------
                                                         $ (8,620)       $ (2,095)       $    777
                                                         ========        ========        ========
</TABLE>

     The unrealized appreciation (depreciation) on invested assets
available-for-sale is reported as a separate component of stockholders' equity,
reduced by adjustments to deferred acquisition costs, VOBA, and a provision for
deferred income taxes.

     A summary of the components of the net unrealized appreciation
(depreciation) on invested assets carried at fair value is as follows:

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                              -------------------------------
                                                                2000       1999        1998
                                                              --------   ---------   --------
                                                                     ($ IN THOUSANDS)
<S>                                                           <C>        <C>         <C>
Unrealized appreciation (depreciation)
  Fixed maturity securities................................   $(42,681)  $(283,908)  $105,186
  Equity securities........................................         68         897    (15,261)
  Other investments........................................     (5,741)        172        674
  Closed Block investments.................................      9,268     (46,045)    42,332
Deferred policy acquisition costs and VOBA.................     21,904     119,961    (82,286)
Deferred income taxes......................................      6,018      72,959    (22,464)
Minority interest..........................................         --      57,336    (11,852)
                                                              --------   ---------   --------
                                                              $(11,164)  $ (78,628)  $ 16,329
                                                              ========   =========   ========
</TABLE>

     The change in unrealized appreciation (depreciation) on fixed maturity
securities was an increase of $237 million, a decrease of $389 million and a
decrease of $15 million for the years ended December 31, 2000, 1999 and 1998,
respectively; the corresponding amounts for equity securities were a $0.8
million decrease, $16 million increase and a $16 million decrease, respectively.

     At December 31, 2000, investments in fixed maturity securities with a
carrying amount of $26.0 million were on deposit with state insurance
departments to satisfy regulatory requirements.

     No investment in any person or its affiliates exceeded 10 percent of
stockholders' equity at December 31, 2000.

                                       F-22
<PAGE>   71
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(3) LOANS

     Loans consisted of the following:

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                               ------------------------------
                                                                 2000       1999       1998
                                                               --------   --------   --------
                                                                      ($ IN THOUSANDS)
<S>                                                            <C>        <C>        <C>
Single-family real estate...................................   $ 31,762   $169,525   $187,080
Multi-family real estate....................................     40,366      4,980     26,855
Commercial real estate......................................    478,221    452,149    398,394
Real estate contracts.......................................         --         --      6,215
Commercial..................................................        179        309     41,487
                                                               --------   --------   --------
                                                                550,528    626,963    660,031
Allowance for credit losses.................................    (15,671)   (18,046)   (22,299)
                                                               --------   --------   --------
                                                               $534,857   $608,917   $637,732
                                                               ========   ========   ========
</TABLE>

     The Company manages its credit risk associated with these loans by
diversifying its mortgage portfolio by property type and geographic location and
by seeking favorable loan to value ratios on secured properties. The states with
the highest concentration of mortgage loans were Texas, Florida and Iowa with
principal balances of $98.9 million, $81.9 million and $47.4 million,
respectively.

     At December 31, 2000 and 1999, the Company's investment in loans included
$0.9 million and $4.2 million, respectively, in loans that are considered to be
impaired, for which the related allowance for credit losses are $0.9 million and
$1.8 million, respectively. The average recorded investment in impaired loans
during the years ended December 31, 2000, and 1999 was $0.9 million and $11.0
million, respectively. For the years ended December 31, 2000, 1999, and 1998 the
Company recorded $0.2 million, $2.1 million and $0.3 million, respectively, in
interest income on those impaired loans.

     The amounts the Company will ultimately realize from these loans could
differ materially from their carrying values because of future developments
affecting the underlying collateral or the borrower's ability to repay the loans
and leases. As of December 31, 2000, there were no material commitments to lend
additional funds to customers whose loans were classified as nonaccrual or
restructured.

     No mortgage loan on any one individual property exceeded $8 million at
December 31, 2000.

     Provisions for losses are summarized as follows:

<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                                                               ---------------------------
                                                                2000      1999      1998
                                                               -------   -------   -------
                                                                    ($ IN THOUSANDS)
<S>                                                            <C>       <C>       <C>
Balance at beginning of year................................   $18,046   $22,299   $15,284
  Charge offs, net of recoveries............................      (150)      144    (2,259)
  Write down on mortgages sold/transferred to real estate...        --        --    (1,100)
  Provision for losses......................................    (2,225)   (4,397)   10,374
                                                               -------   -------   -------
Balance at end of year......................................   $15,671   $18,046   $22,299
                                                               =======   =======   =======
</TABLE>

     Write downs on loans sold or transferred to real estate fluctuate between
periods in relation to foreclosure activity and the related underlying
collateral values.

                                       F-23
<PAGE>   72
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(4) DEFERRED POLICY ACQUISITION COSTS

     A summary of the policy acquisition costs deferred and amortized are as
follows:

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                               ------------------------------
                                                                 2000       1999       1998
                                                               --------   --------   --------
                                                                      ($ IN THOUSANDS)
<S>                                                            <C>        <C>        <C>
Balance at beginning of year................................   $437,852   $319,774   $202,322
Policy acquisition costs deferred...........................    193,073    153,254    144,734
Policy acquisition costs amortized..........................    (38,020)   (35,176)   (27,282)
Acquisition of Minority Interest adjustment.................   (236,887)        --         --
                                                               --------   --------   --------
                                                                356,018    437,852    319,774
Unrealized (gain) loss on available-for-sale securities.....     33,169     91,811    (73,744)
                                                               --------   --------   --------
Balance at end of year......................................   $389,187   $529,663   $246,030
                                                               ========   ========   ========
</TABLE>

     The components of the deferred policy acquisition costs are as follows:

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                               ------------------------------
                                                                 2000       1999       1998
                                                               --------   --------   --------
                                                                      ($ IN THOUSANDS)
<S>                                                            <C>        <C>        <C>
Universal life insurance....................................   $ 76,985   $123,425   $116,734
Annuity products............................................    200,729    207,396    127,116
Participating traditional life insurance....................     61,967     84,265     58,402
Non-participating traditional life insurance................     16,337     22,766     17,522
                                                               --------   --------   --------
                                                                356,018    437,852    319,774
Unrealized (gain) loss on available-for-sale securities.....     33,169     91,811    (73,744)
                                                               --------   --------   --------
                                                               $389,187   $529,663   $246,030
                                                               ========   ========   ========
</TABLE>

     Commissions represent approximately 77 percent of deferred policy
acquisition costs.

(5) VALUE OF BUSINESS ACQUIRED

     A summary of VOBA established and amortized is as follows:

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                               ------------------------------
                                                                 2000       1999       1998
                                                               --------   --------   --------
                                                                      ($ IN THOUSANDS)
<S>                                                            <C>        <C>        <C>
Balance at beginning of the year............................   $202,392   $233,082   $266,014
Value of business acquired during the year..................      1,308      1,914         --
Amortization of VOBA asset..................................    (39,776)   (32,604)   (32,932)
Acquisition of Minority Interest adjustment.................    243,941         --         --
                                                               --------   --------   --------
                                                                407,865    202,392    233,082
Unrealized (gain) loss on available-for-sale securities.....    (11,265)    28,150     (8,542)
                                                               --------   --------   --------
Balance at end of year......................................   $396,600   $230,542   $224,540
                                                               ========   ========   ========
</TABLE>

     Amortization is recognized in proportion to expected future gross profits
over a 20 year period and is based on the average interest crediting rates which
range from 4.05% to 7.61% for 2000 and over the next five years. Interest
accrued on the unamortized VOBA amounted to $15.4 million and $13.0 million in
2000 and

                                       F-24
<PAGE>   73
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1999, respectively, which is netted with the VOBA amortization expense. The
estimated amortization for the next five years is as follows:

<TABLE>
<S>                                                     <C>
2001.................................................   $62,333
2002.................................................    58,637
2003.................................................    50,855
2004.................................................    43,138
2005.................................................    35,641
</TABLE>

(6) NOTES, CONTRACTS PAYABLE AND CAPITAL SECURITIES

     Notes and contracts payable are as follows:

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                                --------------------
                                                                  2000        1999
                                                                --------    --------
                                                                  ($ IN THOUSANDS)
<S>                                                             <C>         <C>
Federal Home Loan Bank community investment long-term
  advances with a weighted average interest rate of 6.28%
  and 6.29% at December 31, 2000 and 1999, respectively,
  maturing at various dates through January, 2014 (A).......    $ 15,627    $ 16,088
Senior notes bearing interest at 6.95% due June, 2005.......     125,000     125,000
Notes payable to banks and insurance companies with interest
  rates ranging from 6.50% to 6.89% and collateralized by
  rental real estate with a depreciated cost of $24.3
  million at December 31, 1999..............................          --      23,175
Revolving credit agreement (B)..............................      75,000      32,000
                                                                --------    --------
                                                                $215,627    $196,263
                                                                ========    ========
</TABLE>

---------------

(A) The Company has multiple credit arrangements with the Federal Home Loan Bank
    (FHLB). In addition to the long-term advances disclosed above, the Company
    is eligible to borrow under variable-rate short term fed funds arrangements
    of which no amount was outstanding at December 31, 2000. The carrying value
    of the securities pledged to the FHLB under all agreements was $17.2 million
    at December 31, 2000.

(B) The revolving credit agreement provides for a maximum borrowing of $150
    million with the balance maturing in October, 2002. The interest rate is
    variable, however, the Company may elect to fix the rate for periods from 30
    days to six months. The loan agreement contains various financial and
    operating covenants which, among other things, limit future indebtedness and
    restrict the amount of future dividend payments.

                                       F-25
<PAGE>   74
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Capital securities consist of the following:

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                                --------------------
                                                                  2000        1999
                                                                --------    --------
                                                                  ($ IN THOUSANDS)
<S>                                                             <C>         <C>
AmerUs Capital I 8.85% Capital
  Securities Series A due February 1, 2007 (A)..............    $ 68,900    $ 68,900
AmerUs Capital II 7.00% Adjustable
  Conversion-rate Equity Security Units are due July 27,
  2003 (B)..................................................     128,791     128,791
                                                                --------    --------
                                                                $197,691    $197,691
                                                                ========    ========
</TABLE>

---------------

(A) The Capital Securities were issued through a wholly-owned subsidiary trust,
    AmerUs Capital I. The sole asset of the trust is the junior subordinated
    debentures of the Company in the principal amount of $88.66 million with
    interest at 8.85% maturing February 1, 2027. The Company has fully and
    unconditionally guaranteed the obligation of the trust under the Capital
    Securities and is obligated to mandatorily redeem the securities on February
    1, 2027. The Company may prepay the securities at anytime after February 1,
    2007.

(B) The Adjustable Conversion-rate Equity Security Units were issued through a
    wholly-owned subsidiary trust, AmerUs Capital II. Each unit consists of a
    forward common stock purchase contract for a share at a price of $31.5625
    per share on July 27, 2001, and a quarterly income preferred security
    bearing interest at 6.86% and due July 27, 2003. The Company repurchased
    451,000 units on December 31, 1998 at an average unit price of $22.89. On
    September 10, 1999, the Company repurchased 61,400 units at an average unit
    price of $24.80. These transactions resulted in gains of $1.7 million and
    $0.2 million, respectively, which have been reflected as additions to
    paid-in capital as the gains are primarily attributable to the change in
    value of the forward common stock purchase contract. The Company is
    obligated to mandatorily redeem the capital securities on July 27, 2003. At
    December 31, 2000, 4,080,500 units were outstanding.

     Maturities of debt and capital securities are as follows for each of the
five years ending December 31:

<TABLE>
<CAPTION>
                                                              ($ IN THOUSANDS)
                                                              ----------------
<S>                                                           <C>
Year ending December 31,
     2001...................................................      $    491
     2002...................................................        75,524
     2003...................................................       129,349
     2004...................................................           596
     2005...................................................       125,635
  Thereafter................................................        81,723
                                                                  --------
                                                                  $413,318
                                                                  ========
</TABLE>

     Interest expense on the debt and capital securities totaled $29.7 million,
$29.0 million and $27.9 million in the years ended December 31, 2000, 1999 and
1998, respectively.

                                       F-26
<PAGE>   75
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(7) INCOME TAXES

     Comprehensive federal income tax expense is summarized as follows:

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                               ------------------------------
                                                                2000        1999       1998
                                                               -------    --------    -------
                                                                      ($ IN THOUSANDS)
<S>                                                            <C>        <C>         <C>
Income tax expense (benefit)
  Continued operations.....................................    $42,516    $ 33,654    $29,100
  Discontinued operations..................................        500       1,766     17,419
  Other comprehensive income...............................     46,870     (88,389)   (15,635)
                                                               -------    --------    -------
                                                               $89,886    $(52,969)   $30,884
                                                               =======    ========    =======
</TABLE>

     The effective income tax rate on pre-tax income varies from the prevailing
corporate federal income tax rate and is summarized as follows:

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                                --------------------------
                                                                 2000      1999      1998
                                                                ------    ------    ------
<S>                                                             <C>       <C>       <C>
Corporate federal income tax rate...........................    35.00%    35.00%    35.00%
Acquisitions costs and reorganization expenses..............      3.91      2.59        --
Net benefit of tax credits..................................     (2.14)    (6.38)    (7.18)
Goodwill amortization.......................................      2.51      2.72      3.27
Dividend received deduction.................................     (2.57)    (0.13)    (0.28)
Other items, net............................................      0.16      0.65      0.66
                                                                ------    ------    ------
Effective tax rate..........................................    36.87%    34.45%    31.47%
                                                                ======    ======    ======
</TABLE>

     The Company's federal income tax expense (benefit) is summarized as
follows:

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                                -----------------------------
                                                                 2000       1999       1998
                                                                -------    -------    -------
                                                                      ($ IN THOUSANDS)
<S>                                                             <C>        <C>        <C>
Current.....................................................    $21,825    $19,249    $31,155
Deferred....................................................     20,691     14,405     (2,055)
                                                                -------    -------    -------
Total income tax expense....................................    $42,516    $33,654    $29,100
                                                                =======    =======    =======
</TABLE>

                                       F-27
<PAGE>   76
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The significant components of net deferred income tax assets (liabilities)
are summarized as follows:

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                                ----------------------
                                                                  2000         1999
                                                                ---------    ---------
                                                                   ($ IN THOUSANDS)
<S>                                                             <C>          <C>
Deferred income tax assets:
  Policy reserves and policyholder funds....................    $ 223,676    $ 179,012
  Policy acquisition costs capitalized for tax..............       54,729       49,188
  Net unrealized depreciation on available-for-sale
     securities.............................................       13,684      114,945
  Deferred compensation.....................................        9,846        9,955
  Credit carryover..........................................        7,067       14,412
  Other invested assets.....................................        7,270        1,897
  Unearned income...........................................        8,752           --
  Other.....................................................        5,297       21,042
                                                                ---------    ---------
     Total gross deferred income tax asset..................      330,321      390,451
                                                                ---------    ---------
Deferred income tax liabilities:
  Deferred policy acquisition costs.........................     (141,444)    (182,489)
  Deferred policy acquisition costs and VOBA related to
     unrealized
     depreciation...........................................       (7,666)     (41,986)
  Value of business acquired................................     (167,782)     (70,837)
  Other.....................................................      (19,333)     (18,682)
                                                                ---------    ---------
     Total gross deferred income tax liability..............     (336,225)    (313,994)
                                                                ---------    ---------
     Net deferred income tax asset (liability)..............    $  (5,904)   $  76,457
                                                                =========    =========
</TABLE>

     The Company is required to establish a "valuation allowance" for any
portion of the deferred tax asset that management believes will not be realized.
In the opinion of management, it is more likely than not that it will realize
the benefit of the deferred tax assets, and, therefore, no such valuation
allowance has been established.

     Federal income tax returns for the Company for years through 1992 are
closed to further assessment of taxes. The Internal Revenue Service is examining
federal income tax returns of the Company for 1993 through 1998. Management
believes adequate provisions have been made for any additional taxes which may
become due with respect to open years.

(8) EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT PLANS

     The Company has defined benefit pension plans which covered substantially
all of the Company's employees. The plans provided for benefits based upon years
of service and the employee's compensation. The Company froze the defined
benefit pension plans effective December 31, 1995. Effective January 1, 1996,
the defined benefit pension plans were replaced by a defined contribution
savings and retirement plan which also replaced the Company's defined
contribution pension plans.

                                       F-28
<PAGE>   77
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                               -------------------
                                                                 2000       1999
                                                               --------   --------
                                                                ($ IN THOUSANDS)
<S>                                                            <C>        <C>
Change in benefit obligation:
  Benefit obligation at beginning of year...................   $ 32,038   $ 42,202
  Interest cost.............................................      2,455      2,690
  Amendments................................................         --      1,141
  Actuarial (gain) loss.....................................      1,640     (3,987)
  Settlements...............................................         --        632
  Actual benefits paid......................................     (2,746)   (10,640)
                                                               --------   --------
     Benefit obligation at end of year......................   $ 33,387   $ 32,038
                                                               ========   ========
Change in plan assets:
  Fair value of plan assets at beginning of year............   $ 36,450   $ 43,591
  Actual return on plan assets..............................      4,151     (2,399)
  Company contribution......................................        149      5,898
  Benefits paid and transfers...............................     (2,746)   (10,640)
                                                               --------   --------
     Fair value of plan assets at end of year...............   $ 38,004   $ 36,450
                                                               ========   ========
Reconciliation of funded status
  Accumulated benefit obligation............................   $(33,387)  $(32,038)
  Projected benefit obligation..............................    (33,387)   (32,038)
  Market value of plan assets...............................     38,004     36,450
                                                               --------   --------
  Funded status.............................................      4,617      4,412
  Unrecognized transition obligation........................         (7)       (16)
  Unrecognized prior service cost...........................        293        421
  Unrecognized net loss.....................................        904      1,122
                                                               --------   --------
  Prepaid benefit cost......................................   $  5,807   $  5,939
                                                               ========   ========
Amounts recognized in the consolidated balance sheet consist
  of:
  Liabilities
     Accrued pension cost...................................   $ (3,283)  $ (3,374)
  Assets
     Prepaid pension cost...................................      9,090      9,313
                                                               --------   --------
       Net prepaid pension cost.............................   $  5,807   $  5,939
                                                               ========   ========
Weighted-average assumptions as of end of year
  Discounted rate...........................................      7.50%      8.00%
  Expected return on plan assets............................      8.00%      8.00%
  Rate of compensation increase.............................        N/A        N/A
</TABLE>

                                       F-29
<PAGE>   78
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                               ------------------------------
                                                                 2000       1999       1998
                                                               --------   --------   --------
                                                                      ($ IN THOUSANDS)
<S>                                                            <C>        <C>        <C>
Components of net periodic benefit cost:
  Interest cost.............................................   $  2,455   $  2,690   $  2,916
  Expected return on plan assets............................     (2,829)    (3,368)    (3,463)
  Amortization of transition obligation.....................         (2)        (5)        (6)
  Amortization of prior service cost........................        (76)       (32)       769
  Recognized actuarial loss.................................         --         27         40
                                                               --------   --------   --------
  Net periodic benefit cost.................................   $   (452)  $   (688)  $    256
  Settlement cost...........................................         --      2,408         --
                                                               --------   --------   --------
     Total expense..........................................   $   (452)  $  1,720   $    256
                                                               ========   ========   ========
</TABLE>

DEFINED CONTRIBUTION PENSION PLANS

     The Company has a defined contribution savings and retirement plan. Company
contributions are non-discretionary and consist of a matching contribution of an
amount equal to 125 percent of employee contributions, up to 4 percent of annual
employee compensation, and an annual contribution of an amount equal to 4
percent of annual employee compensation. Beginning in 1999, the Company uses a
combination of cash and Company common stock for the annual contribution. The
shares for this purpose are provided by the Company's leveraged Employee Stock
Ownership Plan. Compensation expense for the employer match and annual
contribution amounted to $4.3 million, $4.4 million and $3.3 million in 2000,
1999 and 1998, respectively, including $1.3 million and $0.5 million of ESOP
compensation expense in 2000 and 1999, respectively.

LEVERAGED EMPLOYEE STOCK OWNERSHIP PLAN

     In connection with the acquisition of AmVestors, the Company has a
leveraged Employee Stock Ownership Plan (ESOP) which was sponsored by AmVestors
for all AmVestors full-time employees with one year of service. The ESOP
acquired AmVestors stock, which was subsequently exchanged for the Company's
stock, through the proceeds of a note payable to American Investors Life
Insurance Company, a subsidiary of AmVestors. The note bears interest at 7.0%
and is payable in annual installments through December 30, 2002. The note had an
unpaid principal balance of $0.7 million and $1.4 million at December 31, 2000
and 1999, respectively.

     The Company makes annual contributions to the ESOP equal to the ESOP's debt
service less dividends received by the ESOP. All dividends received by the ESOP
are used to pay debt service. The ESOP shares initially were pledged as
collateral for its debt. As the debt is repaid, shares are released from
collateral and allocated to active employees of the Company based on the
proportion of debt service paid in the year. Beginning in 1999, the released
shares are used to fund a portion of the Company's annual defined contribution
savings and retirement plan contribution.

     The Company accounts for its ESOP in accordance with Statement of Position
93-6. Accordingly, as shares are released from collateral, compensation expense,
or a reduction in the annual defined contribution savings and retirement plan
liability, is reported equal to the current market price of the shares, and the
shares become outstanding for earnings-per-share (EPS) computations. ESOP
compensation expense was $1.3 million, $0.5 million and $0.4 million for the
years ended December 31, 2000, 1999 and 1998, respectively.

                                       F-30
<PAGE>   79
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The ESOP shares were as follows:

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                               ------------------------------
                                                                 2000       1999       1998
                                                               --------   --------   --------
<S>                                                            <C>        <C>        <C>
Allocated shares............................................    199,624    169,439    148,336
Unallocated shares..........................................     39,307     79,307    102,362
                                                               --------   --------   --------
Total ESOP shares...........................................    238,931    248,746    250,698
                                                               ========   ========   ========
Fair market value of unallocated shares (in thousands)......   $  1,273   $  1,824   $  2,250
                                                               ========   ========   ========
</TABLE>

NONQUALIFIED PENSION PLAN

     The Company has a nonqualified pension plan covering substantially all of
AmerUs' career and general agents. Accumulated benefits of the plan are unfunded
and have been included in other liabilities at December 31, 2000 and 1999,
amounting to $22.4 million, and $21.2 million, respectively. Total nonqualified
pension expense amounted to $0.6 million, $0.9 million, and $0.5 million for the
years ended December 31, 2000, 1999 and 1998, respectively.

POSTRETIREMENT PLANS

     The Company has postretirement benefit plans which provide eligible
participants and dependents with certain medical, dental and life insurance
benefits.

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                                ------------------
                                                                 2000       1999
                                                                -------    -------
                                                                 ($ IN THOUSANDS)
<S>                                                             <C>        <C>
Change in benefit obligation:
  Benefit obligation at beginning of year...................    $ 6,675    $ 7,585
  Service cost..............................................        158        166
  Interest cost.............................................        574        481
  Plan participants' contributions..........................         73         58
  Actuarial (gain) loss.....................................      1,021       (964)
  Actual benefits paid......................................       (658)      (651)
                                                                -------    -------
     Benefit obligation at end of year......................    $ 7,843    $ 6,675
                                                                =======    =======
Change in plan assets:
  Fair value of plan assets at beginning of year............    $    --    $    --
  Company contribution......................................        585        593
  Plan participant contribution.............................         73         58
  Benefits paid.............................................       (658)      (651)
                                                                -------    -------
     Fair value of plan assets at end of year...............    $    --    $    --
                                                                =======    =======
Reconciliation of funded status:
  Accumulated postretirement benefit obligation.............    $(7,843)   $(6,675)
  Market value of plan assets...............................         --         --
                                                                -------    -------
  Funded status.............................................    $(7,843)   $(6,675)
  Unrecognized prior service cost...........................        381        740
  Unrecognized net (gain)...................................       (984)    (2,723)
                                                                -------    -------
  Accrued benefit cost......................................    $(8,446)   $(8,658)
                                                                =======    =======
</TABLE>

                                       F-31
<PAGE>   80
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                                ------------------
                                                                 2000       1999
                                                                -------    -------
                                                                 ($ IN THOUSANDS)
<S>                                                             <C>        <C>
Weighted-average assumptions as of end of year:
  Discount rate.............................................      7.50%      8.00%
  Initial weighted health care cost trend rate..............      6.90%      7.20%
  Ultimate health care cost trend rate......................      5.00%      5.00%
</TABLE>

<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                                                                ------------------------
                                                                2000     1999      1998
                                                                -----    -----    ------
                                                                    ($ IN THOUSANDS)
<S>                                                             <C>      <C>      <C>
Components of net periodic benefit cost:
  Service cost..............................................    $158     $166     $ 268
  Interest cost.............................................     574      481       536
  Amortization of prior service cost........................      74       83        83
  Amortization of net (gain)................................     (40)     (68)      (62)
                                                                ----     ----     -----
  Net periodic benefit cost.................................     766      662       825
  Settlement (gain).........................................      --       --      (904)
                                                                ----     ----     -----
     Total (income) expense.................................    $766     $662     $ (79)
                                                                ====     ====     =====
</TABLE>

     Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one-percentage-point change in the
assumed health care cost trend rates would have the following effects in 2000:

<TABLE>
<CAPTION>
                                                                1% POINT     1% POINT
                                                                INCREASE    (DECREASE)
                                                                --------    ----------
                                                                   ($ IN THOUSANDS)
<S>                                                             <C>         <C>
Effect on total of service and interest cost components.....     $ 11.0      $ (10.4)
Effect of postretirement benefit obligation.................     $128.5      $(122.0)
</TABLE>

(9) REINSURANCE

     The Company has indemnity reinsurance agreements with various companies
whereby life insurance in excess of its retention limits is reinsured. Effective
January 1, 2000, the Company entered into additional reinsurance agreements
which effectively reduced the Company's retention limit to $100,000 for the
majority of policies issued since July 1, 1996 and for the majority of new
business going forward. In addition, effective July 1, 2000, the Company entered
into a reinsurance agreement covering its Closed Block policies. Under this
agreement, the Company has reinsured approximately 90% of the Closed Block net
amount at risk not previously reinsured. Insurance in force ceded to
nonaffiliated companies under risk sharing arrangements at December 31, 2000,
1999 and 1998, totaled approximately $25,208 million, $5,616 million and $3,779
million, respectively.

                                       F-32
<PAGE>   81
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Net premiums and amounts earned were as follows:

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                              -------------------------------
                                                                2000        1999       1998
                                                              --------    --------    -------
                                                                     ($ IN THOUSANDS)
<S>                                                           <C>         <C>         <C>
Direct premiums and amounts assessed against
  policyholders...........................................    $103,380    $101,622    $89,848
Reinsurance assumed.......................................       1,385       1,750      1,036
Reinsurance ceded.........................................     (15,908)    (13,851)    (9,687)
                                                              --------    --------    -------
Net premiums and amounts earned...........................    $ 88,857    $ 89,521    $81,197
                                                              ========    ========    =======
</TABLE>

     At December 31, 2000 and 1999, the Company reinsured 15% and 25%,
respectively, of its equity index annuity reserves amounting to $103.0 million
and $108.6 million, respectively, with an unaffiliated reinsurer. As of the same
dates, the Company also reinsured approximately 1% in each year of its deferred
annuity reserves amounting to $31.6 million and $44.2 million, respectively,
with an unaffiliated reinsurer.

     Effective October 1, 2000, the Company entered into a reinsurance agreement
to cede 35% of certain fixed annuity production on a modified coinsurance basis.
Fixed annuity production ceded under this agreement totaled approximately $34.2
million in 2000.

     The Company is contingently liable for the portion of the policies
reinsured under each of its existing reinsurance agreements in the event the
reinsurance companies are unable to pay their portion of any reinsured claim.
Management believes that any liability from this contingency is unlikely.
However, to limit the possibility of such losses, the Company evaluates the
financial condition of its reinsurers and monitors concentration of credit risk.

(10) COMMITMENTS AND CONTINGENCIES

     The Company is obligated to make future capital contributions to various
partnerships of up to $11.9 million. The Company has also agreed to loan up to
$6.9 million to partnerships.

     The Company is party to financial instruments in the normal course of
business to meet the financing needs of its customers having risk exposure not
reflected in the balance sheet. These financial instruments include commitments
to extend credit, guarantees and standby letters of credit. Commitments to
extend credit are agreements to lend to customers. Commitments generally have
fixed expiration dates and may require payment of a fee. Since many commitments
expire without being drawn upon, the total amount of commitments does not
necessarily represent future cash requirements. The Company has also guaranteed
two loans for a fee. At December 31, 2000, outstanding commitments to extend
credit totaled approximately $61.3 million and loan guarantees totaled
approximately $6.5 million.

     The Company has an agreement with Bank One, N.A. whereby the Company
guarantees the payment of loans made to certain of the Company's managers and
executives for the purpose of purchasing Common Stock and ACES pursuant to the
Stock Purchase Program. The liability of the Company in respect of the principal
amount of loans is limited to $25 million. The Company has also guaranteed
interest and all other fees and obligations owing on the loans. Each participant
in the program has agreed to repay the Company for any amounts paid by the
Company under the guarantee in accordance with a reimbursement agreement entered
into between the participant and the Company.

     AmerUs and its joint venture partner are contingently liable in the event
the joint venture, Ameritas Variable Life Insurance Company (AVLIC), cannot meet
its policyholder obligations. At December 31, 2000, AVLIC had statutory assets
of $2,453.3 million, liabilities of $2,389.6 million, and surplus of $63.7
million.

                                       F-33
<PAGE>   82
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     In the ordinary course of business, the Company and its subsidiaries are
engaged in certain litigation, none of which management believes is material to
the Company's results of operations.

(11) STOCKHOLDERS' EQUITY

     Generally, the stockholders' equity of the Company's insurance subsidiaries
available for distribution to the Company is limited to the amounts that the
insurance subsidiaries' net assets, as determined in accordance with statutory
accounting practices, exceed minimum statutory capital requirements; however,
payments of such amounts as dividends may be subject to approval by regulatory
authorities. In 2001, the Company's insurance subsidiaries can distribute
approximately $92.7 million in the form of dividends to the Company without
prior approval of such regulatory authorities.

STOCK OPTION PLANS

     The Company has three stock incentive plans authorizing the issuance of
incentive and non-qualified stock options to employees, officers and
non-employee directors of the Company. The Company has reserved 3,150,000 shares
of Common Stock for issuance under these plans.

     In conjunction with the acquisition of AmVestors, the Company has two
additional plans in which no additional shares may be granted. They are a
non-qualified stock option plan and an incentive stock option plan.

     The Company also has a non-employee stock option plan authorizing the
issuance of stock options or SARs to insurance agents and other non-employees of
the Company. The Company has reserved 100,000 shares of Common Stock for
issuance under this plan. The terms and conditions under this plan are the same
as under the employee stock incentive plans.

     The option price per share under all plans may not be less than the fair
value of the Company's common stock on the date of grant and the term of the
option may not be longer than ten years. Generally, all options have a
three-year vesting schedule with one-third of the options granted vesting at the
end of each of the three years.

     A summary of the Company's stock option plan follows:

<TABLE>
<CAPTION>
                                                                        YEARS ENDED DECEMBER 31,
                                                   ------------------------------------------------------------------
                                                           2000                   1999                   1998
                                                   --------------------   --------------------   --------------------
                                                               WEIGHTED               WEIGHTED               WEIGHTED
                                                    NUMBER     AVERAGE     NUMBER     AVERAGE     NUMBER     AVERAGE
                                                      OF       EXERCISE      OF       EXERCISE      OF       EXERCISE
                                                    SHARES      PRICE      SHARES      PRICE      SHARES      PRICE
                                                   ---------   --------   ---------   --------   ---------   --------
<S>                                                <C>         <C>        <C>         <C>        <C>         <C>
Outstanding, beginning of year...................  1,509,764    $24.27    1,327,473    $25.02    1,485,709    $23.57
Granted at market price..........................    628,000     20.15      275,750     21.61      163,550     31.19
Exercised........................................     (9,441)    21.41      (10,442)    19.15     (268,786)    20.51
Forfeited........................................   (186,269)    27.47      (83,017)    28.04      (53,000)    28.19
                                                   ---------    ------    ---------    ------    ---------    ------
Outstanding, end of year.........................  1,942,054    $22.65    1,509,764    $24.27    1,327,473    $25.02
                                                   =========    ======    =========    ======    =========    ======
Exercisable, end of year.........................  1,115,832    $23.87      940,543    $23.62      700,381    $22.03
                                                   =========    ======    =========    ======    =========    ======
</TABLE>

                                       F-34
<PAGE>   83
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table summarizes information about stock options outstanding
under the Company's option plan as of December 31, 2000:

<TABLE>
<CAPTION>
                                                                       OPTIONS OUTSTANDING
                                                              --------------------------------------
                                                                              WEIGHTED      WEIGHTED
                                                               REMAINING       AVERAGE      AVERAGE
                                                                OPTIONS      CONTRACTUAL    EXERCISE
RANGE OF EXERCISE PRICES                                      OUTSTANDING   LIFE IN YEARS    PRICE
------------------------                                      -----------   -------------   --------
<S>                                                           <C>           <C>             <C>
$10.88-$14.50..............................................       13,448         3.9         $13.01
$14.51-$18.12..............................................      103,881         3.3          15.17
$18.13-$21.75..............................................    1,003,724         7.9          19.85
$21.76-$23.37..............................................      260,217         4.6          23.27
$23.38-$29.00..............................................      427,667         6.4          27.89
$29.01-$32.62..............................................       93,117         7.1          31.19
$32.63-$36.25..............................................       40,000         7.0          35.63
                                                               ---------         ---         ------
                                                              1,942,054..        6.8         $22.65
                                                               =========         ===         ======
</TABLE>

     The following table summarizes information about stock options exercisable
under the Company's option plan as of December 31, 2000:

<TABLE>
<CAPTION>
                                                                  OPTIONS EXERCISABLE
                                                                -----------------------
                                                                               WEIGHTED
                                                                               AVERAGE
                                                                  OPTIONS      EXERCISE
RANGE OF EXERCISE PRICES                                        EXERCISABLE     PRICE
------------------------                                        -----------    --------
<S>                                                             <C>            <C>
$10.88-$14.50...............................................        13,448      $13.01
$14.51-$18.12...............................................       103,881       15.17
$18.13-$21.75...............................................       310,244       19.36
$21.76-$23.37...............................................       168,257       23.29
$23.38-$29.00...............................................       422,667       27.88
$29.01-$32.62...............................................        63,999       31.19
$32.63-$36.25...............................................        33,336       35.50
                                                                 ---------      ------
                                                                 1,115,832      $23.87
                                                                 =========      ======
</TABLE>

     The estimated weighted average fair value of options granted in 2000, 1999
and 1998 was $9.40, $9.63 and $13.03 per share, respectively. The Company
applies Accounting Principles Board Opinion 25 and related Interpretations in
accounting for its stock option plans. Accordingly, no compensation expense has
been recognized for its option plans. Had compensation expense for the Company's
option plans been determined based on the fair value at the grant dates for
awards under those plans consistent with the method prescribed

                                       F-35
<PAGE>   84
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

by SFAS 123, the Company's net earnings and diluted earnings per share for the
years ended December 31, 2000, 1999 and 1998 would have been reduced to the pro
forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                               ------------------------------
                                                                2000       1999        1998
                                                               -------    -------    --------
<S>                                                            <C>        <C>        <C>
Net earnings ($ in thousands):
  As reported..............................................    $51,840    $38,436    $103,499
  Pro forma................................................    $50,285    $36,243    $101,721
Basic earnings per share:
  As reported..............................................    $  2.48    $  2.21    $   5.96
  Pro forma................................................    $  2.40    $  2.08    $   5.86
Diluted earnings per share:
  As reported..............................................    $  2.46    $  2.20    $   5.88
  Pro forma................................................    $  2.39    $  2.07    $   5.78
</TABLE>

     The fair value of options granted was estimated on the date of grant using
the Black-Scholes pricing model with an expected life equal to the contractual
expiration and the following weighted average assumptions:

<TABLE>
<CAPTION>
                                                                2000     1999     1998
                                                                -----    -----    -----
<S>                                                             <C>      <C>      <C>
Expected Volatility.........................................    37.00%   37.00%   25.00%
Risk-free Interest Rate.....................................     6.82%    5.39%    5.69%
Dividend Yield..............................................     1.99%    1.86%    1.26%
</TABLE>

NONVESTED STOCK

     The Company has awarded common stock to eligible employees and non-employee
directors under the two stock incentive plans. The plans have restriction
periods of two to three years tied to employment and/or service. A portion of
the awards were recorded at the market value on the date of the grant as
unearned compensation since common shares were legally issued on that date. The
initial values of these grants are amortized over the restriction periods, net
of forfeitures. The remaining awards, for which common shares will not be issued
until the end of the restriction period, are being accrued net of forfeitures
over the required service period at the market value on the date of issuance.

     Nonvested stock and compensation expense information is as follows:

<TABLE>
<CAPTION>
                                                                            YEARS ENDED DECEMBER 31,
                                                           ----------------------------------------------------------
                                                                  2000                1999                1998
                                                           ------------------   -----------------   -----------------
                                                                     WEIGHTED            WEIGHTED            WEIGHTED
                                                           NUMBER    AVERAGE    NUMBER   AVERAGE    NUMBER   AVERAGE
                                                             OF      EXERCISE     OF     EXERCISE     OF     EXERCISE
                                                           SHARES     PRICE     SHARES    PRICE     SHARES    PRICE
                                                           -------   --------   ------   --------   ------   --------
<S>                                                        <C>       <C>        <C>      <C>        <C>      <C>
Outstanding, beginning of year...........................  36,245     $26.85    17,899    $31.07       --     $   --
Granted at market price..................................  12,466      20.26    18,946     23.01    19,949     31.17
Exercised................................................  (17,576)    26.47       --         --       --         --
Forfeited................................................    (300)     31.56     (600)     31.56    (2,050)    31.56
                                                           -------    ------    ------    ------    ------    ------
Outstanding, end of year.................................  30,835     $24.35    36,245    $26.85    17,899    $31.07
                                                           =======    ======    ======    ======    ======    ======
Compensation expense ($ in thousands)....................             $  435              $  335              $  264
                                                                      ======              ======              ======
</TABLE>

                                       F-36
<PAGE>   85
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

STOCK APPRECIATION RIGHTS

     As part of the stock incentive plans and the non-employee stock option
plan, the Board of Directors is authorized to grant stock appreciation rights
("SARs") to employees, officers, agents and other non-employees in tandem with
stock options. A SAR can be exercised only to the extent the option with respect
to which it is granted is not exercised, and is subject to the same terms and
conditions as the option to which it relates. Issuance of SARs is made at the
sole discretion of the Board of Directors.

     The Company's SARs are summarized as follows:

<TABLE>
<CAPTION>
                                                                               YEARS ENDED DECEMBER 31,
                                                              -----------------------------------------------------------
                                                                    2000                 1999                 1998
                                                              -----------------   ------------------   ------------------
                                                                       WEIGHTED             WEIGHTED             WEIGHTED
                                                              NUMBER   AVERAGE    NUMBER    AVERAGE    NUMBER    AVERAGE
                                                                OF     EXERCISE     OF      EXERCISE     OF      EXERCISE
                                                              SHARES    PRICE     SHARES     PRICE     SHARES     PRICE
                                                              ------   --------   -------   --------   -------   --------
<S>                                                           <C>      <C>        <C>       <C>        <C>       <C>
Outstanding, beginning of year..............................  13,500    $23.31         --    $   --     81,024    $21.94
Granted at market price.....................................  11,500     20.94     13,500     23.31         --        --
Exercised...................................................     --         --         --        --    (81,024)    21.94
                                                              ------    ------    -------    ------    -------    ------
Outstanding, end of year....................................  25,000    $22.22     13,500    $23.31         --    $   --
                                                              ======    ======    =======    ======    =======    ======
Compensation expense ($ in thousands).......................            $  103               $   --               $   --
                                                                        ======               ======               ======
</TABLE>

STOCK WARRANTS

     In conjunction with the acquisition of AmVestors, the Company has
outstanding warrants to purchase shares of the Company's Common Stock. The
Company's stock warrant activity is summarized as follows:

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                               ------------------------------
                                                                 2000       1999       1998
                                                               --------   --------   --------
<S>                                                            <C>        <C>        <C>
Warrants outstanding, beginning of year.....................    473,596    473,596    477,770
Exercise of warrants........................................         --         --     (4,174)
                                                               --------   --------   --------
Warrants outstanding, end of year...........................    473,596    473,596    473,596
                                                               ========   ========   ========
Compensation expense ($ in thousands).......................   $     --   $     --   $     --
                                                               ========   ========   ========
</TABLE>

     The remaining warrants are exercisable at $24.42 per share and expire on
April 2, 2002.

(12) STATUTORY ACCOUNTING PRACTICES

     The Company's insurance subsidiaries' statutory net income was $69.4
million, $49.4 million and $61.0 million in the years ended December 31, 2000,
1999 and 1998, respectively. The Company's insurance subsidiaries' statutory
surplus and capital was $472.7 million, $450.8 million and $472.1 million at
December 31, 2000, 1999 and 1998, respectively. The minimum capital and surplus
requirements in the states of Iowa and Kansas are $5.0 million and $1.2 million,
respectively.

     The Company's insurance subsidiaries are domiciled in Iowa and Kansas and
prepare their statutory-basis financial statements in accordance with accounting
practices prescribed or permitted by those respective state insurance
departments. Prescribed statutory accounting practices include state laws,
regulations, and general administrative rules, as well as a variety of
publications of the NAIC. Permitted statutory accounting practices encompass all
accounting practices that are not prescribed; such practices may differ from
state to state, may differ from company to company within a state and may change
in the future. The NAIC has codified statutory accounting practices which are
expected to constitute the only source of prescribed statutory

                                       F-37
<PAGE>   86
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

accounting practices and are effective January 1, 2001. Codification will change
prescribed statutory accounting practices and may result in changes to the
accounting practices that insurance enterprises use to prepare their statutory
financial statements. The states of Iowa and Kansas have adopted the NAIC's
codification without exception. The Company has determined the impact of
adopting the NAIC codification on its statutory financial statements will be an
increase to statutory surplus of approximately $25 million.

     The respective insurance departments impose minimum risk-based capital
(RBC) requirements on insurance enterprises that were developed by the NAIC. The
formulas for determining the amount of RBC specify various weighting factors
that are applied to financial balances or various levels of activity based on
the perceived degree of risk. Regulatory compliance is determined by a ratio of
the enterprise's regulatory total adjusted capital, as defined by the NAIC, to
its authorized control level, RBC, as defined by the NAIC. Enterprises below
specific trigger points or ratios are classified within certain levels, each of
which requires specified corrective action. The life insurance subsidiaries have
exceeded the authorized control level RBC requirements in each of the years
since the inception of the RBC requirement in 1993.

(13) FINANCIAL INSTRUMENTS

     The Company utilizes a variety of off balance sheet financial instruments
as part of its efforts to hedge and manage fluctuations in the market value of
its portfolio of available-for-sale securities, attributable to changes in
general interest rate levels, and to manage duration mismatch of assets and
liabilities. Those instruments include interest rate exchange agreements (swaps,
caps, and swaptions) and equity-indexed agreements (options) and involve
elements of credit and market risks in excess of the amounts recognized in the
accompanying financial statements at a given point in time. The contract or
notional amounts of those instruments reflect the extent of involvement in the
various types of financial instruments.

     The Company's exposure to credit risk is the risk of loss from a
counterparty failing to perform according to the terms of the contract. That
exposure includes settlement risk (i.e., the risk that the counterparty defaults
after the Company has delivered funds or securities under terms of the contract)
that would result in an accounting loss and replacement cost risk (i.e., the
cost to replace the contract at current market rates should the counterparty
default prior to settlement date). To limit exposure associated with
counterparty nonperformance on interest rate exchange agreements, the Company
enters into transactions with only highly rated counterparties.

     The credit risk on all financial instruments, whether on or off the balance
sheet, is controlled through an ongoing credit review, approval, and monitoring
process. The Company determines, on an individual counterparty basis, the need
for collateral or other security to support financial instruments with credit
risk and establishes individual and aggregate counterparty exposure limits.

                                       F-38
<PAGE>   87
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The Company's outstanding derivative positions shown in notional or
contract amounts, along with their carrying value and estimated fair values, are
summarized as follows:

<TABLE>
<CAPTION>
                                                                    DECEMBER 31, 2000
                                                             --------------------------------
                                                             NOTIONAL    CARRYING      FAIR
                                                              AMOUNT      VALUE       VALUE
                                                             --------    --------    --------
                                                                     ($ IN THOUSANDS)
<S>                                                          <C>         <C>         <C>
Interest rate swaps......................................    $385,000    $ (4,738)   $ (5,984)
Options..................................................     572,743     101,397      97,340
                                                             --------    --------    --------
                                                             $957,743    $ 96,659    $ 91,356
                                                             ========    ========    ========
</TABLE>

<TABLE>
<CAPTION>
                                                                     DECEMBER 31, 1999
                                                              --------------------------------
                                                              NOTIONAL    CARRYING      FAIR
                                                               AMOUNT      VALUE       VALUE
                                                              --------    --------    --------
                                                                      ($ IN THOUSANDS)
<S>                                                           <C>         <C>         <C>
Interest rate swaps.......................................    $385,000    $    --     $  3,336
Options...................................................     255,914     91,888      121,701
                                                              --------    -------     --------
                                                              $640,914    $91,888     $125,037
                                                              ========    =======     ========
</TABLE>

INTEREST RATE EXCHANGE AGREEMENTS

     The Company enters into interest rate exchange agreements to reduce and
manage interest rate risk associated with individual assets and liabilities and
its overall aggregate portfolio. Interest rate swap agreements, which expire in
2002, 2003 and 2004, generally involve the exchange of interest payments. The
interest rate cap agreements involve the payment of a maximum fixed interest
rate when an indexed rate exceeds that fixed rate. Swaption agreements involve
the right to enter into a swap transaction at a pre-specified price. These
agreements are used in conjunction with interest rate caps to protect against
rising rates. The amounts to be received or paid pursuant to those agreements
are accrued and recognized in the accompanying consolidated statements of income
through an adjustment to investment income over the life of the agreements. The
net effect on income from amortization and interest paid or received was none, a
decrease of $1.5 million and a decrease of $0.8 million in 2000, 1999 and 1998,
respectively. Gains or losses realized on closed or terminated agreements
accounted for as hedges are deferred and amortized to investment income on a
constant yield basis over the shorter of the life of the agreements or the
expected remaining life of the underlying assets or liabilities.

EQUITY-INDEXED AGREEMENTS

     The Company enters into financial agreements to manage the equity risk in
its equity-indexed annuities. Call options, which expire beginning in 2000
through 2010, are linked to the index in which the equity-indexed annuity
crediting rates are based. This allows the Company to participate in index
increases if the market advances as a hedge against the higher credited rates.
The amounts to be received or paid pursuant to these agreements are accrued and
recognized as an adjustment to income over the life of the agreements.

                                       F-39
<PAGE>   88
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table shows unrealized gains and losses on derivative
positions:

<TABLE>
<CAPTION>
                                                                   DECEMBER 31, 2000
                                                  ---------------------------------------------------
                                                                                            NET
                                                   TOTAL                                 UNREALIZED
                                                  NOTIONAL   UNREALIZED   UNREALIZED       GAINS
                                                   VALUE       GAINS       (LOSSES)       (LOSSES)
                                                  --------   ----------   ----------   --------------
                                                                   ($ IN THOUSANDS)
<S>                                               <C>        <C>          <C>          <C>
Interest rate swaps............................   $385,000    $    --      $(1,246)       $(1,246)
Options........................................    572,743         --       (4,057)        (4,057)
                                                  --------    -------      -------        -------
                                                  $957,743    $    --      $(5,303)       $(5,303)
                                                  ========    =======      =======        =======
</TABLE>

<TABLE>
<CAPTION>
                                                                   DECEMBER 31, 1999
                                                  ---------------------------------------------------
                                                                                            NET
                                                   TOTAL                                 UNREALIZED
                                                  NOTIONAL   UNREALIZED   UNREALIZED       GAINS
                                                   VALUE       GAINS       (LOSSES)       (LOSSES)
                                                  --------   ----------   ----------   --------------
                                                                   ($ IN THOUSANDS)
<S>                                               <C>        <C>          <C>          <C>
Interest rate swaps............................   $385,000    $ 3,336      $    --        $ 3,336
Options........................................    255,914     29,813           --         29,813
                                                  --------    -------      -------        -------
                                                  $640,914    $33,149      $    --        $33,149
                                                  ========    =======      =======        =======
</TABLE>
<TABLE>
<CAPTION>
                                MATURITY SCHEDULE BY YEAR FOR DERIVATIVE PRODUCTS
                              ------------------------------------------------------
                                2001       2002        2003        2004       2005
                              --------    -------    --------    --------    -------
                                                 ($ IN THOUSANDS)
<S>                           <C>         <C>        <C>         <C>         <C>
Pay fixed swaps:
 Notional amount............  $     --    $50,000    $150,000    $185,000    $    --
Weighted average:
 Receive rate(A)............     6.268%     6.268%      6.336%      6.638%        --
 Pay rate(B)................     6.588%     6.588%      6.562%      6.407%        --
Options:
 Notional amount............  $366,481    $ 1,915    $ 43,452    $ 54,304    $48,186

<CAPTION>
                              MATURITY SCHEDULE BY YEAR FOR DERIVATIVE PRODUCTS
                              ------------------------------------------------
                               2006       2007      2008      2009      2010
                              -------    ------    ------    ------    -------
                                              ($ IN THOUSANDS)
<S>                           <C>        <C>       <C>       <C>       <C>
Pay fixed swaps:
 Notional amount............  $    --    $   --    $   --    $   --    $    --
Weighted average:
 Receive rate(A)............       --        --        --        --         --
 Pay rate(B)................       --        --        --        --         --
Options:
 Notional amount............  $15,000    $7,700    $3,830    $7,405    $24,470
</TABLE>

---------------
(A) The actual variable rates in the agreements are based on a constant maturity
    treasury (CMT) plus a spread and one-month LIBOR and the table assumes that
    such rates will remain constant at December 31, 2000, levels. To the extent
    that actual rates change, the variable interest rate information will change
    accordingly.

(B) The actual variable rates in the agreements are based on three-month LIBOR
    and the table assumes that such rates will remain constant at December 31,
    2000, levels. To the extent that actual rates change, the variable interest
    rate information will change accordingly.

(14) REORGANIZATION AND ACQUISITION

     In conjunction with the reorganization discussed previously, on September
20, 2000, the Company acquired the 42% Minority Interest of its subsidiary,
ALHI, in a stock exchange valued at approximately $298 million. ALHI merged into
the Company simultaneously with the stock exchange. The acquisition of the ALHI
minority interest by the Company was accounted for as a purchase and accordingly
42% of the book value of the assets and liabilities of ALHI were adjusted to
market value as of the acquisition date. Goodwill was reduced by approximately
$34 million. Approximately 42% of the ALHI earnings for the reporting periods up
to the acquisition date are reduced from the Company's results of operations on
the line titled "Minority interest" on the Company's Consolidated Statements of
Income. From the acquisition date forward, the Company's results of operations
include 100% of these earnings.

                                       F-40
<PAGE>   89
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Reorganization costs of $11.3 million, $7.1 million and none are included
in the Company's expenses for the years ended December 31, 2000, 1999 and 1998,
respectively. These costs consist primarily of legal, actuarial and consulting
expenses associated with the Company's demutualization.

     The following table sets forth certain pro forma operating data of the
Company for the years ended December 31, 2000 and 1999. This pro forma data
assumes the purchase of the minority interest occurred on January 1, 1999.

<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                                                              ----------------------------
                                                                  2000            1999
                                                              ------------    ------------
                                                              ($ IN THOUSANDS, EXCEPT PER
                                                                      SHARE DATA)
<S>                                                           <C>             <C>
Pro forma operating data:
  Total revenue.............................................    $797,500        $745,500
  Net income................................................    $ 60,900        $ 46,900
  Diluted earnings per share of common stock................    $   2.03        $   1.55
</TABLE>

(15) EARNINGS PER SHARE (EPS)

<TABLE>
<CAPTION>
                                                                       YEARS ENDED DECEMBER 31,
                                           ---------------------------------------------------------------------------------
                                                     2000                        1999                        1998
                                           -------------------------   -------------------------   -------------------------
                                                     NUMBER    PER               NUMBER    PER               NUMBER    PER
                                             NET       OF     SHARE      NET       OF     SHARE      NET       OF     SHARE
                                           INCOME    SHARES   AMOUNT   INCOME    SHARES   AMOUNT   INCOME    SHARES   AMOUNT
                                           -------   ------   ------   -------   ------   ------   -------   ------   ------
                                                               (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                        <C>       <C>      <C>      <C>       <C>      <C>      <C>       <C>      <C>
Basic EPS:
  Net income from continuing
    operations...........................  $51,123   20,922   $2.44    $35,932   17,390   $2.07    $36,446   17,372   $ 2.10
  Effect of dilutive securities
    Options..............................       --     114    (0.01)        --      77    (0.01)        --     237     (0.03)
  Warrants...............................       --      --       --         --      --       --         --      --        --
  Stock appreciation rights..............       --      --       --         --      --       --                 --        --
                                           -------   ------   ------   -------   ------   ------   -------   ------   ------
Diluted EPS..............................  $51,123   21,036   $2.43    $35,932   17,467   $2.06    $36,446   17,609   $ 2.07
                                           =======   ======   ======   =======   ======   ======   =======   ======   ======
</TABLE>

(16) FAIR VALUE OF FINANCIAL INSTRUMENTS

     SFAS 107, "Disclosures about Fair Values of Financial Instruments,"
requires disclosures of fair value information about financial instruments,
whether recognized or not recognized in a company's balance sheet, for which it
is practicable to estimate that value. In cases where quoted market prices are
not available, fair values are based on estimates using discounted cash flow or
other valuation techniques. Those techniques are significantly affected by the
assumptions used, including the discount rates and estimates of the amount and
timing of future cash flows. SFAS 107 excludes certain insurance liabilities and
other non-financial instruments from its disclosure requirements. The fair value
amounts presented herein do not include an amount for the value associated with
customer or agent relationships, the expected interest margin (interest earnings
over interest credited) to be earned in the future on investment-type products
or other intangible items. Accordingly, the aggregate fair value amounts
presented herein do not necessarily represent the underlying value of the
Company; likewise, care should be exercised in deriving conclusions about the
Company's business or financial condition based on the fair value information
presented herein.

     The Company closely monitors the level of its insurance liabilities, the
level of interest rates credited to its interest-sensitive products and the
assumed interest margin provided for within the pricing structure of its other
products. Those amounts are taken into consideration in the Company's overall
management of interest rate risk that attempts to minimize exposure to changing
interest rates through the matching of investment maturities with amounts
expected to be due under insurance contracts. As such, the Company believes that
it has reduced the volatility inherent in its fair value adjusted stockholders'
equity, although such volatility will

                                       F-41
<PAGE>   90
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

not be reduced completely. The Company has used discount rates in the
determination of fair values for its liabilities that are consistent with market
yields for related assets. The use of the asset market yield is consistent with
management's opinion that the risks inherent in the Company's asset and
liability portfolios are similar and the fact that fair values for both assets
and liabilities generally will react in much the same manner during periods of
interest rate changes. However, that assumption might not result in fair values
that are consistent with values obtained through an actuarial appraisal of the
Company's business or values that might arise in a negotiated transaction.

     The following presentation reflects fair values for those instruments
specifically covered by SFAS 107, along with fair value amounts for those
traditional insurance liabilities for which disclosure is permitted but not
required; the fair values for all other assets and liabilities have been
reported at their carrying amounts.

VALUATION METHODS AND ASSUMPTIONS

     The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:

     Short-term investments, policy loans and other investments:  the carrying
amounts for these instruments approximate their fair values.

     Fixed maturities and equity securities:  fair values for bonds are based on
quoted market prices or dealer quotes. If a quoted market price is not
available, fair value is estimated using values obtained from independent
pricing services or, in the case of private placements, are estimated by
discounting expected future cash flows using a current market rate applicable to
the yield, credit quality, and maturity of the investments. The fair values for
preferred and common stocks are based on quoted market prices.

     Loans:  for all performing fixed interest rate loans, the estimated net
cash flows to maturity were discounted to derive an estimated market value. The
discount rate used was based on the individual loan's remaining weighted average
life and a basis point spread based on the market conditions for the type of
loan and credit quality. These spreads were over the December 31, 2000, United
States Treasury yield curve. Performing variable rate commercial loans and
residential loans were valued at the current outstanding balance. Loans which
have been restructured, in foreclosure, significantly delinquent or are to
affiliates were valued primarily at the lower of the estimated net cash flows to
maturity discounted at a market rate of interest or the current outstanding
principal balance.

     Hedging instruments:  fair values for derivative securities are based on
pricing models or formulas using current assumptions and are classified as other
assets or other liabilities.

     Policy reserves:  fair values of the Company's liabilities under contracts
not involving significant mortality or morbidity risks (annuities primarily) are
stated at the cost the Company would incur to extinguish the liability (i.e.,
the cash surrender value).

     Notes payable, contracts payable and capital securities:  fair values for
notes payable, contracts payable and capital securities are estimated using
discounted cash flow analysis based on the Company's current incremental
borrowing rate for similar types of borrowing arrangements.

     The carrying amounts of other financial assets, dividends payable to
policyowners and policy reserves including significant mortality or morbidity
risks approximate their fair values.

                                       F-42
<PAGE>   91
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The estimated fair values of the Company's significant financial
instruments are as follows:

<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                            ----------------------------------------------------
                                                      2000                        1999
                                            ------------------------    ------------------------
                                             CARRYING     ESTIMATED      CARRYING     ESTIMATED
                                              AMOUNT      FAIR VALUE      AMOUNT      FAIR VALUE
                                            ----------    ----------    ----------    ----------
                                                              ($ IN THOUSANDS)
<S>                                         <C>           <C>           <C>           <C>
FINANCIAL ASSETS:
Securities available-for-sale:
  Fixed maturity securities.............    $7,070,056    $7,070,056    $6,680,755    $6,680,755
                                            ==========    ==========    ==========    ==========
  Equity securities.....................    $  152,903    $  152,903    $   45,268    $   45,268
                                            ==========    ==========    ==========    ==========
  Short-term investments................    $   20,861    $   20,861    $      155    $      155
                                            ==========    ==========    ==========    ==========
Loans...................................    $  534,857    $  568,551    $  608,917    $  632,833
                                            ==========    ==========    ==========    ==========
Policy loans............................    $  111,570    $  111,570    $  109,864    $  109,864
                                            ==========    ==========    ==========    ==========
Other investments (excluding options)...    $  221,056    $  221,056    $  200,801    $  200,801
                                            ==========    ==========    ==========    ==========
Interest rate swaps:
  Net receivable position...............    $       --    $       --    $       --    $    3,336
                                            ==========    ==========    ==========    ==========
  Net payable position..................    $   (4,738)   $   (5,984)   $       --    $       --
                                            ==========    ==========    ==========    ==========
Interest rate caps......................    $       --    $       --    $       --    $       --
                                            ==========    ==========    ==========    ==========
Options.................................    $  101,397    $   97,340    $   91,888    $  121,701
                                            ==========    ==========    ==========    ==========
Futures.................................    $       --    $       --    $       --    $       --
                                            ==========    ==========    ==========    ==========
FINANCIAL LIABILITIES:
Policy reserves for annuities...........    $6,438,681    $6,333,026    $6,264,417    $6,140,936
                                            ==========    ==========    ==========    ==========
Notes, contracts payable and capital
  securities............................    $  413,318    $  413,318    $  393,954    $  393,954
                                            ==========    ==========    ==========    ==========
</TABLE>

(17) PROPOSED COMBINATION

     On February 18, 2000, the Company and Indianapolis Life Insurance Company
(ILICO) entered into a definitive agreement for a combination of the companies.
Under the original terms of the agreement, ILICO would demutualize and ILICO's
members would receive cash, policy credits and stock equivalent to the value of
11.25 million shares of the Company's stock and ILICO would become a
wholly-owned subsidiary of the Company. However, on September 18, 2000 the terms
of the agreement were revised to reduce the consideration to the equivalent of
the value of 9.3 million shares. The reduction in the number of shares was based
on several factors, including increased expenses related to ILICO's
demutualization, increased terminations of existing fixed annuities issued by
ILICO's annuity subsidiary, and a decrease in revenues and earnings in ILICO's
annuity subsidiary operations. These factors were partially offset by stronger
than expected performance of ILICO itself.

     As part of the agreement, the Company made an initial investment of $100
million in a downstream holding company of ILICO on February 18, 2000.

     ILICO is a 95-year old mutual life insurance and annuity company based in
Indianapolis, Indiana. ILICO and its subsidiaries are licensed to do business in
all 50 states and the District of Columbia. At December 31, 2000, ILICO had
total assets of $5.9 billion and insurance in force of $32.2 billion.

                                       F-43
<PAGE>   92
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The combination transaction is subject to normal closing conditions,
including appropriate policyholder/ member, shareholder and regulatory
approvals. The Company expects the demutualization of ILICO and combination into
the Company to take place in the second quarter of 2001.

(18) DISCONTINUED OPERATIONS

     In the first quarter of 1998, the Company began implementation of a plan
for the disposition of its residential real estate operating segment. This
operating segment consisted of three subsidiaries: AmerUs Mortgage, Inc. (AMI),
AmerUs Home Services (AHS) and AmerUs Land Development (ALD), formerly known as
Iowa Realty Development Company. In April 1998, the Company ceased loan
origination activity of AMI. In October 1998, the Company sold the mortgage
servicing rights of AMI and recorded an after tax gain of $1.7 million. The
Company plans to complete the sale of the remaining assets of AMI and has
recorded an estimated loss of $0.3 million on these assets. In May 1998, the
Company sold AHS and recorded an after tax gain of $19.1 million. The Company
plans to complete the liquidation of the ALD real estate inventory and no loss
is expected on the sale of this inventory.

     In July 1998, the Company completed the sale of its Bank operating segment
subsidiary, AmerUs Bank. The Company recorded an after tax gain of $54.1 million
on the sale.

     The results of operations for the above subsidiaries have been classified
as discontinued operations and prior periods have been restated. Gains on sale
of discontinued operations and operating income and loss from discontinued
operations are as follows:

<TABLE>
<CAPTION>
                                                               YEARS ENDED DECEMBER 31,
                                                        ---------------------------------------
                                                           2000          1999          1998
                                                        -----------   -----------   -----------
                                                                   ($ IN THOUSANDS)
<S>                                                     <C>           <C>           <C>
Gain on sale of AMI mortgage servicing rights, net of
  income taxes of $1,052.............................   $        --   $        --   $     1,720
Gain on sale of AHS, net of income taxes of
  $16,680............................................            --            --        19,087
Gain on sale of AmerUs Bank, net of income taxes of
  $5,142.............................................            --            --        54,076
                                                        -----------   -----------   -----------
                                                                 --            --        74,883
Operating income (loss) from discontinued operations,
  net of income taxes of $500, $1,766 and ($5,455),
  respectively.......................................           717         2,504        (7,830)
                                                        -----------   -----------   -----------
                                                                717         2,504        (7,830)
                                                        -----------   -----------   -----------
                                                        $       717   $     2,504   $    67,053
                                                        ===========   ===========   ===========
Net income from discontinued operations per common
  share:
  Basic..............................................   $      0.03   $      0.14   $      3.86
  Diluted............................................   $      0.03   $      0.14   $      3.81
Weighted average common shares outstanding:
  Basic..............................................    20,922,371    17,390,165    17,372,136
  Diluted............................................    21,035,518    17,467,132    17,609,748
</TABLE>

                                       F-44
<PAGE>   93
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(19) OPERATING SEGMENTS

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

LIFE INSURANCE

     Open Block:  The primary product offerings consist of whole life, universal
life and term life insurance policies. These products are marketed on a national
basis primarily through a Preferred Producer agency system and a Personal
Producing General Agent ("PPGA") distribution system.

     Closed Block:  The Closed Block was established for insurance policies
which had a dividend scale in effect as of June 30, 1996. The Closed Block was
designed to provide reasonable assurance to owners of insurance policies
included therein that, after the reorganization of AmerUs, 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. The primary products included in the Closed Block are whole life,
certain universal life policies and term life insurance policies.

ANNUITIES

     The Annuity segment markets individual fixed annuities on a national basis
primarily through independent brokers and marketing companies. The Annuity
segment also includes one insurance contract issued to a commercial paper
conduit.

     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. For example, net realized capital gains or losses on
investments, excluding gains or losses on convertible debt which are considered
core earnings, are not included as part of operating segment income. These items
are shown between adjusted pre-tax operating income and income from operations
on the following operating segment income tables. Operating segment income is
generally income before non-core realized gains and losses, interest expense,
income taxes and equity in earnings of its unconsolidated subsidiary, AMAL.
Premiums, product charges, policyowner benefits, insurance expenses,
amortization of deferred policy acquisition costs and VOBA and dividends to
policyowners are attributed directly to each operating segment. Net investment
income and core realized gains and losses on investments are allocated based on
directly-related assets required for transacting the business of that segment.
Other revenues and benefits and expenses which are deemed not to be associated
with any specific reportable segment are grouped together in the All Other
category. These items primarily consist of holding company revenues and expenses
and the operations of the Company's real estate management subsidiary. The
contribution to the operating income of the life insurance segment from the
Closed Block is reported as a single line item.

     Assets are segmented based on policy liabilities directly attributable to
each segment. All assets allocated to the Closed Block are grouped together and
shown as a separate item entitled "Closed Block Assets."

     There are no significant intersegment transactions.

                                       F-45
<PAGE>   94
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Operating segment income and assets are as follows:

                            OPERATING SEGMENT INCOME
                                ($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31, 2000
                                               --------------------------------------------------------
                                                                                              TOTAL
                                               LIFE INSURANCE    ANNUITIES    ALL OTHER    CONSOLIDATED
                                               --------------    ---------    ---------    ------------
<S>                                            <C>               <C>          <C>          <C>
Revenues:
  Insurance premiums.........................     $ 66,807       $ 21,820      $   230       $ 88,857
  Universal life and annuity product
     charges.................................       52,641         34,814           --         87,455
  Net investment income......................       99,194        468,404       19,021        586,619
  Core realized gains on investments.........           --          3,063           --          3,063
  Other income...............................           --         21,787       12,788         34,575
  Contribution from the Closed Block.........       24,503             --           --         24,503
                                                  --------       --------      -------       --------
                                                   243,145        549,888       32,039        825,072
Benefits and expenses:
  Policyowner benefits.......................      107,327        343,220          676        451,223
  Underwriting, acquisition, and other
     expenses................................       50,117         52,554       19,381        122,052
  Amortization of deferred policy acquisition
     costs and value of business acquired,
     net of non-core adjustment of
     ($8,722)................................       20,616         65,902           --         86,518
  Dividends to policyowners..................        6,014             --           --          6,014
                                                  --------       --------      -------       --------
                                                   184,074        461,676       20,057        665,807
                                                  --------       --------      -------       --------
Adjusted pre-tax operating income............     $ 59,071       $ 88,212      $11,982        159,265
                                                  ========       ========      =======
  Non-core realized (losses) on
     investments.............................                                                 (11,683)
  Amortization of deferred policy acquisition
     costs due to non-core realized gains or
     losses..................................                                                   8,722
  Reorganization costs.......................                                                 (11,265)
                                                                                             --------
Income from continuing operations............                                                 145,039
Interest (expense)...........................                                                 (29,723)
Income tax (expense).........................                                                 (42,516)
Minority interest............................                                                 (21,677)
Income from discontinued operations, net of
  tax........................................                                                     717
                                                                                             --------
     Net income..............................                                                $ 51,840
                                                                                             ========
</TABLE>

                                       F-46
<PAGE>   95
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                            OPERATING SEGMENT INCOME
                                ($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31, 1999
                                                    ------------------------------------------------
                                                      LIFE                                 TOTAL
                                                    INSURANCE   ANNUITIES   ALL OTHER   CONSOLIDATED
                                                    ---------   ---------   ---------   ------------
<S>                                                 <C>         <C>         <C>         <C>
Revenues:
  Insurance premiums.............................   $ 64,263    $ 25,122     $   136      $ 89,521
  Universal life and annuity product charges.....     50,499      27,835          --        78,334
  Net investment income..........................     94,400     443,359      19,521       557,280
  Core realized gains on investments.............         --      10,166          --        10,166
  Other income...................................         --       6,304      13,987        20,291
  Contribution from the Closed Block.............     25,166          --          --        25,166
                                                    --------    --------     -------      --------
                                                     234,328     512,786      33,644       780,758
Benefits and expenses:
  Policyowner benefits...........................    107,812     337,983         291       446,086
  Underwriting, acquisition, and other
     expenses....................................     53,376      37,204      25,787       116,367
  Amortization of deferred policy acquisition
     costs and value of business acquired, net of
     non-core adjustment of $2,134...............     17,268      48,378          --        65,646
  Dividends to policyowners......................      4,526          --          --         4,526
                                                    --------    --------     -------      --------
                                                     182,982     423,565      26,078       632,625
                                                    --------    --------     -------      --------
Adjusted pre-tax operating income................   $ 51,346    $ 89,221     $ 7,566       148,133
                                                    ========    ========     =======
  Non-core realized (losses) on investments......                                          (12,261)
  Amortization of deferred policy acquisition
     costs due to non-core realized gains or
     losses......................................                                           (2,134)
  Reorganization costs...........................                                           (7,062)
                                                                                          --------
Income from continuing operations................                                          126,676
Interest (expense)...............................                                          (28,983)
Income tax (expense).............................                                          (33,654)
Minority interest................................                                          (28,107)
Income from discontinued operations, net of
  tax............................................                                            2,504
                                                                                          --------
     Net income..................................                                         $ 38,436
                                                                                          ========
</TABLE>

                                       F-47
<PAGE>   96
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                            OPERATING SEGMENT INCOME
                                ($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31, 1998
                                                     ---------------------------------------------
                                                       LIFE                   ALL        TOTAL
                                                     INSURANCE   ANNUITIES   OTHER    CONSOLIDATED
                                                     ---------   ---------   ------   ------------
<S>                                                  <C>         <C>         <C>      <C>
Revenues:
  Insurance premiums..............................   $ 51,261    $ 29,610    $  326     $ 81,197
  Universal life and annuity product charges......     47,225      26,757        --       73,982
  Net investment income...........................     72,684     433,221     8,202      514,107
  Core realized gains on investments..............         --       9,400        --        9,400
  Other income....................................         --       1,971    13,511       15,482
  Contribution from the Closed Block..............     31,478          --        --       31,478
                                                     --------    --------    ------     --------
                                                      202,648     500,959    22,039      725,646
Benefits and expenses:
  Policyowner benefits............................     92,443     339,293        21      431,757
  Underwriting, acquisition, and other expenses...     43,376      37,563    21,159      102,098
  Amortization of deferred policy acquisition
     costs and value of business acquired, net of
     non-core adjustment of ($199)................     21,360      39,053        --       60,413
  Dividends to policyowners.......................      2,558          --        --        2,558
                                                     --------    --------    ------     --------
                                                      159,737     415,909    21,180      596,826
                                                     --------    --------    ------     --------
Adjusted pre-tax operating income.................   $ 42,911    $ 85,050    $  859      128,820
                                                     ========    ========    ======
  Non-core realized (losses) on investments.......                                        (8,623)
  Amortization of deferred policy acquisition
     costs due to non-core realized gains or
     losses.......................................                                           199
  Reorganization costs............................                                            --
                                                                                        --------
Income from continuing operations.................                                       120,396
Interest (expense)................................                                       (27,931)
Income tax (expense)..............................                                       (29,100)
Minority interest.................................                                       (26,919)
(Loss) from discontinued operations, net of tax...                                        (7,830)
Gain on sale of discontinued operations, net of
  tax.............................................                                        74,883
                                                                                        --------
     Net income...................................                                      $103,499
                                                                                        ========
</TABLE>

                                       F-48
<PAGE>   97
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

                            OPERATING SEGMENT ASSETS
                                ($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                  LIFE                                  TOTAL
                                               INSURANCE    ANNUITIES    ALL OTHER   CONSOLIDATED
                                               ----------   ----------   ---------   ------------
<S>                                            <C>          <C>          <C>         <C>
DECEMBER 31, 2000
Investments.................................   $1,278,041   $6,859,314   $ 73,833    $ 8,211,188
Deferred policy acquisition costs and
  VOBA......................................   245,864...      539,923         --        785,787
Other assets................................      147,304      660,738     82,148        890,190
Closed Block assets.........................    1,584,357           --         --      1,584,357
                                               ----------   ----------   --------    -----------
Total assets................................   $3,255,566   $8,059,975   $155,981    $11,471,522
                                               ==========   ==========   ========    ===========
DECEMBER 31, 1999
Investments.................................   $1,278,891   $6,406,034   $ 98,480    $ 7,783,405
Deferred policy acquisition costs and
  VOBA......................................      290,952      469,253         --        760,205
Other assets................................      166,986      622,751    351,738      1,141,475
Closed Block assets.........................    1,412,622           --         --      1,412,622
                                               ----------   ----------   --------    -----------
Total assets................................   $3,149,451   $7,498,038   $450,218    $11,097,707
                                               ==========   ==========   ========    ===========
DECEMBER 31, 1998
Investments.................................   $1,163,503   $6,510,465   $181,741    $ 7,855,709
Deferred policy acquisition costs and
  VOBA......................................      140,379      330,191         --        470,570
Other assets................................       93,807      680,228    226,860      1,000,895
Closed Block assets.........................    1,453,305           --         --      1,453,305
                                               ----------   ----------   --------    -----------
Total assets................................   $2,850,994   $7,520,884   $408,601    $10,780,479
                                               ==========   ==========   ========    ===========
</TABLE>

                                       F-49
<PAGE>   98
                                AMERUS GROUP CO.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(20) QUARTERLY RESULTS (UNAUDITED)

2000 QUARTERLY DATA

<TABLE>
<CAPTION>
                                                               QUARTER ENDED
                                           ------------------------------------------------------
                                            MARCH 31       JUNE 30     SEPTEMBER 30   DECEMBER 31
                                           -----------   -----------   ------------   -----------
                                             ($ IN THOUSANDS, EXCEPT EARNINGS PER COMMON SHARE)
<S>                                        <C>           <C>           <C>            <C>
Total revenues (excluding realized
  gains).................................  $   199,048   $   201,729   $   205,836    $   215,396
Realized gains (losses)..................  $     2,096   $      (369)  $    (2,603)   $    (7,744)
Total benefits and expenses..............  $   159,820   $   166,215   $   165,694    $   176,621
Net income from continuing operations....  $    14,984   $     7,730   $    10,432    $    17,977
Weighted average number of shares:
  Basic..................................   17,390,165    17,390,165    18,888,948     29,933,019
  Diluted................................   17,453,374    17,407,252    19,026,397     30,239,946
Net income from continuing operations per
  share:
  Basic..................................  $      0.86   $      0.44   $      0.55    $      0.60
  Diluted................................  $      0.86   $      0.44   $      0.55    $      0.59
</TABLE>

1999 QUARTERLY DATA

<TABLE>
<CAPTION>
                                                               QUARTER ENDED
                                           ------------------------------------------------------
                                            MARCH 31       JUNE 30     SEPTEMBER 30   DECEMBER 31
                                           -----------   -----------   ------------   -----------
                                             ($ IN THOUSANDS, EXCEPT EARNINGS PER COMMON SHARE)
<S>                                        <C>           <C>           <C>            <C>
Total revenues (excluding realized
  gains)................................   $   185,882   $   188,237   $   193,453    $   203,020
Realized gains (losses).................   $     3,071   $     2,780   $       967    $    (8,913)
Total benefits and expenses.............   $   153,639   $   152,013   $   163,311    $   172,858
Net income from continuing operations...   $    11,330   $    13,580   $     9,305    $     1,717
Weighted average number of shares:
  Basic.................................    17,390,165    17,390,165    17,390,165     17,390,165
  Diluted...............................    17,426,883    17,479,957    17,551,797     17,463,260
Net income from continuing operations
  per share:
  Basic.................................   $      0.65   $      0.78   $      0.54    $      0.10
  Diluted...............................   $      0.65   $      0.78   $      0.53    $      0.10
</TABLE>

     The Company was formed in 1996 as a mutual holding company and therefore,
had no shares of common stock outstanding until its demutualization on September
20, 2000. At that time, the Company distributed 17.4 million shares of its
common stock to its former members and exchanged its common stock for the 12.9
million shares of common stock held by the public in ALHI on a one-for-one
basis. The Company's income primarily reflects the results of its former
subsidiary, ALHI. Therefore, net income from continuing operations per share has
been calculated based on the number of shares of stock the Company owned of ALHI
from January 1, 1999 through September 20, 2000. Thereafter, net income from
continuing operations per share has been calculated based on the 30.3 million
shares actually outstanding.

                                       F-50
<PAGE>   99

                                AMERUS GROUP CO.

              INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
SCHEDULE                                                                      PAGE
--------                                                                      ----
<S>      <C>                                                            <C>
Independent Auditors' Report on Schedules............................                S-2
I        Summary of Investments -- Other than Investments in Related                 S-3
         Parties.....................................................
II       Condensed Financial Information of Registrant...............   S-4 through S-10
III      Supplementary Insurance Information.........................               S-11
IV       Reinsurance.................................................               S-12
V        Valuation and Qualifying Accounts...........................               S-13
</TABLE>

     All other schedules are omitted for the reason that they are not required,
amounts are not sufficient to require submission of the schedule, or that the
equivalent information has been included in the consolidated financial
statements and notes thereto.

                                       S-1
<PAGE>   100

                   INDEPENDENT AUDITORS' REPORT ON SCHEDULES

The Board of Directors and Stockholders
  AmerUs Group Co.:

     Under date of February 5, 2001, we reported on the consolidated balance
sheets of AmerUs Group Co. and subsidiaries as of December 31, 2000 and 1999,
and the related consolidated statements of income, stockholders' equity,
comprehensive income, and cash flows for each of the years in the three-year
period ended December 31, 2000, as contained in Part II, Item 8 of the annual
report on Form 10-K for the year 2000. In connection with our audits of the
aforementioned consolidated financial statements, we also have audited the
related consolidated financial statement schedules as listed in the accompanying
index. These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statement schedules based on our audits.

     In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.

                                          [KPMG LLP]

Des Moines, Iowa
February 5, 2001

                                       S-2
<PAGE>   101

                                AMERUS GROUP CO.

                                   SCHEDULE I
                             SUMMARY OF INVESTMENTS
                   OTHER THAN INVESTMENTS IN RELATED PARTIES

<TABLE>
<CAPTION>
                                                                     DECEMBER 31, 2000
                                                           -------------------------------------
                                                                                      AMOUNT AT
                                                                                        WHICH
                                                                                      SHOWN IN
                                                           AMORTIZED      MARKET     THE BALANCE
TYPE OF INVESTMENT                                            COST        VALUE         SHEET
------------------                                         ----------   ----------   -----------
                                                                     ($ IN THOUSANDS)
<S>                                                        <C>          <C>          <C>
Fixed Maturities:
  Bonds
     United States Government and government agencies
       and authorities..................................   $1,451,196   $1,468,214   $1,468,214
     States, municipalities and political
       subdivisions.....................................       46,494       47,263       47,263
     Foreign governments................................      152,472      151,033      151,033
     Public utilities...................................      663,480      663,785      663,785
     All other corporate bonds..........................    4,582,481    4,543,884    4,543,884
  Redeemable preferred stock............................      205,794      195,877      195,877
                                                           ----------   ----------   ----------
       Total fixed maturities...........................   $7,101,917   $7,070,056   $7,070,056
Equity securities:
  Common stocks
     Banks, trust and insurance companies...............      151,654      151,822      151,822
     Industrial, miscellaneous and all other............        1,181        1,081        1,081
                                                           ----------   ----------   ----------
       Total equity securities..........................   $  152,835   $  152,903   $  152,903
Mortgage loans on real estate...........................      534,857                   534,857
Real estate.............................................        3,226                     3,226
Policy loans............................................      111,570                   111,570
Other long-term investments.............................      321,809      312,412      317,715
Short-term investments..................................       22,508       20,861       20,861
                                                           ----------                ----------
     Total investments..................................   $8,248,722                $8,211,188
                                                           ==========                ==========
</TABLE>

                                       S-3
<PAGE>   102

                                AMERUS GROUP CO.

                                  SCHEDULE II
                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                            CONDENSED BALANCE SHEETS
                                (PARENT COMPANY)

<TABLE>
<CAPTION>
                                                                      DECEMBER 31,
                                                                ------------------------
                                                                   2000          1999
                                                                ----------    ----------
                                                                    ($ IN THOUSANDS)
<S>                                                             <C>           <C>
ASSETS
Investments:
  Securities available-for-sale at fair value
     Fixed maturity securities..............................    $       --    $   17,296
     Equity securities......................................        31,134            --
  Loans.....................................................           179           309
  Other investments.........................................        83,000        15,708
Investments in subsidiaries, at equity......................     1,142,470       782,586
Cash and cash equivalents...................................        11,529       267,913
Accrued investment income...................................           424           630
Property and equipment......................................        10,165            35
Income taxes receivable.....................................         1,291            --
Deferred income taxes.......................................         9,359         1,044
Other assets................................................        18,730         3,695
                                                                ----------    ----------
     Total assets...........................................    $1,308,281    $1,089,216
                                                                ==========    ==========
</TABLE>

See accompanying notes to condensed financial statements.

                                       S-4
<PAGE>   103

                                AMERUS GROUP CO.

                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                            CONDENSED BALANCE SHEETS
                                (PARENT COMPANY)

<TABLE>
<CAPTION>
                                                                      DECEMBER 31,
                                                                ------------------------
                                                                   2000          1999
                                                                ----------    ----------
                                                                    ($ IN THOUSANDS)
<S>                                                             <C>           <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Accrued expenses and other liabilities....................    $   68,785    $   13,000
  Income taxes payable......................................            --         5,765
  Debt (note 2).............................................       200,683            --
                                                                ----------    ----------
     Total liabilities......................................       269,468        18,765
                                                                ----------    ----------
Minority interest (note 3)..................................            --       309,101
Capital securities (note 2).................................       204,834            --
                                                                ----------    ----------
Stockholders' equity:
  Preferred Stock, no par value, 20,000,000 shares
     authorized, none issued................................            --            --
  Common Stock, no par value, 230,000,000 shares authorized:
     30,011,034 shares issued and outstanding in 2000.......        30,011            --
  Paid-in capital...........................................       809,894            --
  Accumulated other comprehensive income (loss).............       (11,164)      (78,628)
  Unearned compensation.....................................          (146)         (187)
  Unallocated ESOP shares...................................          (683)         (797)
  Unassigned surplus (note 3)...............................            --       840,962
  Retained earnings.........................................         6,067            --
                                                                ----------    ----------
     Total stockholders' equity.............................       833,979       761,350
                                                                ----------    ----------
     Total liabilities and stockholders' equity.............    $1,308,281    $1,089,216
                                                                ==========    ==========
</TABLE>

See accompanying notes to condensed financial statements.

                                       S-5
<PAGE>   104

                                AMERUS GROUP CO.

                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                         CONDENSED STATEMENTS OF INCOME
                                (PARENT COMPANY)

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2000        1999        1998
                                                             --------    --------    --------
                                                                     ($ IN THOUSANDS)
<S>                                                          <C>         <C>         <C>
Revenues:
  Equity in undistributed earnings of subsidiaries.......    $ 79,297    $ 66,377    $ 66,440
  Net investment income..................................      14,337      17,147       8,005
  Realized losses........................................          --      (1,000)         --
  Other income...........................................          --          16         107
                                                             --------    --------    --------
                                                               93,634      82,540      74,552
Expenses:
  Operating expenses.....................................       5,626      10,255      11,716
  Reorganization costs (note 3)..........................       8,284       5,300          --
  Interest expense.......................................       6,021          38         505
                                                             --------    --------    --------
                                                               19,931      15,593      12,221
                                                             --------    --------    --------
Income before income tax expense and minority interest...      73,703      66,947      62,331
Income tax (expense) benefit.............................        (903)     (2,908)      1,034
Minority interest (note 3)...............................     (21,677)    (28,107)    (26,919)
                                                             --------    --------    --------
Net income from continuing operations....................      51,123      35,932      36,446
Income (loss) from discontinued operations, net of tax...         717       2,504      (7,830)
Gain on sale of discontinued operations, net of tax......          --          --      74,883
                                                             --------    --------    --------
Net income...............................................    $ 51,840    $ 38,436    $103,499
                                                             ========    ========    ========
</TABLE>

See accompanying notes to condensed financial statements.

                                       S-6
<PAGE>   105

                                AMERUS GROUP CO.

                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                       CONDENSED STATEMENTS OF CASH FLOWS
                                (PARENT COMPANY)

<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                                                            ---------------------------------
                                                              2000         1999        1998
                                                            ---------    --------    --------
                                                                    ($ IN THOUSANDS)
<S>                                                         <C>          <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..............................................    $  51,840    $ 38,436    $103,499
  Less: (Income) loss from discontinued operations......         (717)     (2,504)      7,830
                                                            ---------    --------    --------
Net income from continuing operations...................       51,123      35,932     111,329
Adjustments to reconcile net income to net cash provided
  by (used by) operating activities:
  Equity in undistributed earnings......................      (79,297)    (66,377)    (66,440)
  Dividends from subsidiaries...........................       48,848      43,798      17,876
  Gain on sale of subsidiaries..........................           --          --     (97,805)
  Realized investment losses............................           --       1,000          --
  Minority interest.....................................       21,677      28,107      26,919
Change in:
  Income taxes..........................................        9,771       7,616       6,222
  Other, net............................................       (7,201)    103,960      22,176
                                                            ---------    --------    --------
     Net cash provided by operating activities..........       44,921     154,036      20,277
                                                            ---------    --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments.................................      (15,000)       (125)    (29,629)
Sale of investments.....................................       13,653          --          --
Proceeds from sale of subsidiaries......................           --          --     119,724
Purchase of notes receivable............................           --          --      (9,150)
Proceeds from repayment of loans........................          131      40,121          --
Cash received in merger with ALHI.......................        2,914          --          --
Other assets, net.......................................         (637)     (3,351)         --
                                                            ---------    --------    --------
     Net cash provided by investing activities..........        1,061      36,645      80,945
                                                            ---------    --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in debt and capital securities, net..............       14,305          --      (9,861)
Allocation of shares in leveraged ESOP..................        1,295          --          --
Cash paid for demutualization distribution..............     (306,168)         --          --
Capital (contribution) to subsidiaries..................           --          --     (14,184)
Dividends paid to stockholders..........................      (11,971)         --          --
Other, net..............................................          173          --          --
                                                            ---------    --------    --------
     Net cash (used in) financing activities............     (302,366)         --     (24,045)
                                                            ---------    --------    --------
Net increase (decrease) in cash.........................     (256,384)    190,681      77,177
Cash at beginning of period.............................      267,913      77,232          55
                                                            ---------    --------    --------
Cash at end of period...................................    $  11,529    $267,913    $ 77,232
                                                            =========    ========    ========
</TABLE>

See accompanying notes to condensed financial statements.

                                       S-7
<PAGE>   106

                                AMERUS GROUP CO.
                                (PARENT COMPANY)

                    NOTES TO CONDENSED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

     AmerUs Group Co. (the Company) is the parent company of its primary
subsidiaries, AmerUs Life Insurance Company (AmerUs), AmVestors Financial
Corporation (AmVestors), Delta Life Corporation (Delta), AmerUs Capital
Management Group, Inc. (ACM) and AmerUs Properties, Inc. (API). The Company's
investment in its subsidiaries is stated at cost plus equity in undistributed
earnings of the subsidiaries. The Company's share of net income of its
unconsolidated subsidiaries is included in income using the equity method. These
financial statements should be read in conjunction with AmerUs Group Co.'s
consolidated financial statements.

(2) DEBT AND CAPITAL SECURITIES

     Debt and capital securities consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                                  2000        1999
                                                                --------    --------
<S>                                                             <C>         <C>
Revolving Credit Agreement(A)...............................    $ 75,000    $  --
ESOP Note(B)................................................         683       --
Senior notes bearing interest at 6.95% due June 2005........     125,000       --
Junior Subordinated debentures bearing interest at
  8.85%(C)..................................................      71,560       --
Junior Subordinated debentures bearing interest at
  7.00%(D)..................................................     133,274       --
                                                                --------    --------
                                                                $405,517    $  --
                                                                ========    ========
</TABLE>

---------------

(A) The revolving credit agreement provides for a maximum borrowing of $150
    million with the balance maturing in October 2002. The interest rate is
    variable, however, the Company may elect to fix the rate for periods from 30
    days to six months. The loan agreement contains various financial and
    operating covenants which, among other things, limit future indebtedness and
    restrict the amount of future dividend payments.

(B) In connection with the acquisition of AmVestors, the Company has a leveraged
    Employee Stock Ownership Plan (ESOP) which was sponsored by AmVestors for
    all AmVestors full-time employees with one year of service. The ESOP
    acquired AmVestors stock, which was subsequently exchanged for Company
    stock, through the proceeds of a note payable to American Investors Life
    Insurance Company, a subsidiary of AmVestors. The note bears interest at
    7.0% and is payable in annual installments through December 31, 2002.

(C) The Company issued $88.66 million of junior subordinated debentures to a
    wholly-owned subsidiary trust in connection with capital securities issued
    by the trust. The debentures bear interest at the rate of 8.85% and mature
    February 1, 2027.

(D) The Company issued $149.4 million of junior subordinated debentures to a
    wholly-owned subsidiary trust in connection with adjustable conversion-rate
    equity security units issued by the trust. The debentures bear interest at
    the rate of 7.00% and mature July 27, 2003.

                                       S-8
<PAGE>   107
                                AMERUS GROUP CO.
                                (PARENT COMPANY)

             NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

     Maturities of long-term debt and capital securities are as follows for each
of the five years ending December 31:

<TABLE>
<CAPTION>
                                                              (IN THOUSANDS)
<S>                                                           <C>
Year ending December 31:
     2001...................................................     $     --
     2002...................................................       75,683
     2003...................................................      133,274
     2004...................................................           --
     2005...................................................      125,000
  Thereafter................................................       71,560
                                                                 --------
                                                                 $405,517
                                                                 ========
</TABLE>

(3) REORGANIZATION

     The Company was formerly known as American Mutual Holding Company (AMHC)
and was a mutual insurance holding company whose principal asset was a 58%
interest in AmerUs Life Holdings, Inc. (ALHI). Public stockholders owned the
remaining 42% interest in ALHI (Minority Interest). ALHI was a holding company
which directly or indirectly owned three principal life insurance subsidiaries:
AmerUs Life Insurance Company (AmerUs), American Investors Life Insurance
Company (American) and Delta Life and Annuity Company (Delta). On September 20,
2000, AMHC converted to stock form, changed its name to AmerUs Group Co. and
acquired the Minority Interest of ALHI by issuing AmerUs Group Co. common stock
in exchange for the outstanding shares of ALHI held by the public. The value of
the stock exchange was approximately $298 million and ALHI merged into the
Company simultaneously with the stock exchange.

     Prior to the conversion of the Company to a stock form, the Company was
owned by individuals and entities who held insurance policies or annuity
contracts issued by AmerUs (Members). In the conversion, which is referred to as
a "demutualization", the Company distributed cash, policy credits and its newly
issued common stock to its Members in exchange for their membership interests.
The value of the distribution totaled approximately $792 million. Reorganization
costs of $8.3 million, $5.3 million and none are included in the Company's
expenses for the years ended December 31, 2000, 1999 and 1998, respectively.
These costs consist primarily of legal, actuarial and consulting expenses
associated with the Company's demutualization.

     The acquisition of the ALHI minority interest by the Company was accounted
for as a purchase and accordingly 42% of the book value of the assets and
liabilities of ALHI were adjusted to market value as of the acquisition date.
Approximately 42% of the ALHI earnings for the reporting periods up to the
acquisition date are reduced from the Company's results of operations on the
line titled "Minority interest" on the Company's Consolidated Statements of
Income. From the acquisition date forward, the Company's results of operations
include 100% of these earnings.

(4) PROPOSED COMBINATION

     On February 18, 2000, the Company and Indianapolis Life Insurance Company (
ILICO) entered into a definitive agreement for a combination of the companies.
Under the original terms of the agreement, ILICO would demutualize and ILICO's
members would receive cash, policy credits and stock equivalent to the value of
11.25 million shares of the Company's stock and ILICO would become a
wholly-owned subsidiary of the Company. However, on September 18, 2000 the terms
of the agreement were revised to reduce the consideration to the equivalent of
the value of 9.3 million shares. The reduction in the number of shares was based
on several factors, including increased expenses related to ILICO's
demutualization, increased terminations of existing fixed annuities issued by
ILICO's annuity subsidiary, and a decrease in revenues and

                                       S-9
<PAGE>   108
                                AMERUS GROUP CO.
                                (PARENT COMPANY)

             NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

earnings in ILICO's annuity subsidiary operations. These factors were partially
offset by stronger than expected performance of ILICO itself.

     As part of the agreement, the Company made an investment of $100 million in
a downstream holding company of ILICO in February, 2000.

     ILICO is a 95-year old mutual life insurance and annuity company based in
Indianapolis, Indiana. ILICO and its subsidiaries are licensed to do business in
all 50 states and the District of Columbia. At December 31, 2000, ILICO had
total assets of $5.9 billion and insurance in force of $32.2 billion.

     The combination transaction is subject to normal closing conditions,
including appropriate policyholder/ member, shareholder and regulatory
approvals. The Company expects the demutualization of ILICO and combination into
the Company to take place in the second quarter of 2001.

                                       S-10
<PAGE>   109

                                AMERUS GROUP CO.

                                  SCHEDULE III

                      SUPPLEMENTARY INSURANCE INFORMATION
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                                ($ IN THOUSANDS)
<TABLE>
<CAPTION>

                                DEFERRED                                                                          BENEFITS,
                                 POLICY       FUTURE POLICY                OTHER POLICY                            CLAIMS,
                               ACQUISITION   BENEFITS, LOSSES                CLAIMS &                   NET        LOSSES &
                                 COSTS &      CLAIMS & LOSS     UNEARNED     BENEFITS     PREMIUM    INVESTMENT   SETTLEMENT
SEGMENT                           VOBA         EXPENSES(1)      PREMIUMS    PAYABLE(2)    REVENUE      INCOME      EXPENSES
-------                        -----------   ----------------   --------   ------------   --------   ----------   ----------
<S>                            <C>           <C>                <C>        <C>            <C>        <C>          <C>
LIFE INSURANCE(3)
12/31/00.....................   $365,820        $2,741,400        $ --       $11,890      $252,157    $212,100     $382,515
12/31/99.....................   $388,093        $2,596,073        $ --       $16,891      $253,707    $202,517     $372,071
12/31/98.....................   $257,858        $2,638,249        $ --       $18,525      $249,439    $188,446     $370,154
ANNUITIES
12/31/00.....................   $539,923        $7,207,576        $ --       $    --      $ 21,820    $468,404     $343,220
12/31/99.....................   $469,253        $6,823,004        $ --       $    --      $ 25,122    $443,359     $337,983
12/31/98.....................   $330,191        $6,302,489        $ --       $    --      $ 29,610    $433,221     $339,293
OTHER
12/31/00.....................   $     --        $   17,372        $ --       $    --      $    230    $ 19,021     $    676
12/31/99.....................   $     --        $       --        $ --       $    --      $    136    $ 19,521     $    291
12/31/98.....................   $     --        $   17,801        $ --       $   322      $    326    $  8,202     $     21
TOTAL(3)
12/31/00.....................   $905,743        $9,966,348        $ --       $11,890      $274,207    $699,525     $726,411
12/31/99.....................   $857,346        $9,419,077        $ --       $16,891      $278,965    $665,397     $710,345
12/31/98.....................   $588,049        $8,958,539        $ --       $18,847      $279,375    $629,869     $709,468

<CAPTION>
                               AMORTIZATION
                               OF DEFERRED
                                  POLICY
                               ACQUISITION      OTHER
                                 COSTS &      OPERATING   PREMIUMS
SEGMENT                            VOBA       EXPENSES    WRITTEN
-------                        ------------   ---------   --------
<S>                            <C>            <C>         <C>
LIFE INSURANCE(3)
12/31/00.....................    $36,053      $ 51,532      n/a
12/31/99.....................    $37,887      $ 57,784      n/a
12/31/98.....................    $48,684      $ 48,418      n/a
ANNUITIES
12/31/00.....................    $56,696      $ 52,554      n/a
12/31/99.....................    $50,230      $ 37,204      n/a
12/31/98.....................    $37,816      $ 37,563      n/a
OTHER
12/31/00.....................    $    --      $ 30,646      n/a
12/31/99.....................    $    --      $ 32,849      n/a
12/31/98.....................    $    --      $ 21,159      n/a
TOTAL(3)
12/31/00.....................    $92,749      $134,732      n/a
12/31/99.....................    $88,117      $127,837      n/a
12/31/98.....................    $86,500      $107,140      n/a
</TABLE>

---------------

(1) Policy reserves, policyowner funds and dividends payable to policyowners

(2) Policy and contract claims

(3) Includes Closed Block amounts

                                       S-11
<PAGE>   110

                                AMERUS GROUP CO.

                                  SCHEDULE IV
                                  REINSURANCE
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                                         PERCENTAGE
                                                 CEDED TO      ASSUMED                   OF AMOUNT
                                     GROSS         OTHER      FROM OTHER       NET        ASSUMED
                                    AMOUNT       COMPANIES    COMPANIES      AMOUNT        TO NET
                                  -----------   -----------   ----------   -----------   ----------
                                                       (DOLLARS IN THOUSANDS)
<S>                               <C>           <C>           <C>          <C>           <C>
YEAR ENDED DECEMBER 31, 2000
Life insurance in force.........  $35,503,699   $25,208,439    $697,800    $10,993,060     6.35%
                                  ===========   ===========    ========    ===========     =====
Premiums
  Life insurance................  $    80,003   $    14,578    $  1,381    $    66,806     2.07%
  Annuities.....................       21,820            --          --         21,820       --%
  Other.........................        1,557         1,331           4            230     1.74%
                                  -----------   -----------    --------    -----------     -----
Total premiums..................  $   103,380   $    15,909    $  1,385    $    88,856     1.56%
                                  ===========   ===========    ========    ===========     =====
YEAR ENDED DECEMBER 31, 1999
Life insurance in force.........  $33,046,944   $ 5,616,065    $655,021    $28,085,900     2.33%
                                  ===========   ===========    ========    ===========     =====
Premiums
  Life insurance................  $    74,878   $    12,365    $  1,750    $    64,263     2.72%
  Annuities.....................       25,122            --          --         25,122       --%
  Other.........................        1,622         1,486          --            136       --%
                                  -----------   -----------    --------    -----------     -----
Total premiums..................  $   101,622   $    13,851    $  1,750    $    89,521     1.95%
                                  ===========   ===========    ========    ===========     =====
YEAR ENDED DECEMBER 31, 1998
Life insurance in force.........  $31,092,285   $ 3,778,838    $626,086    $27,939,533     2.24%
                                  ===========   ===========    ========    ===========     =====
Premiums
  Life insurance................  $    58,536   $     8,311    $  1,036    $    51,261     2.02%
  Annuities.....................       29,610            --          --         29,610       --%
  Other.........................        1,702         1,376          --            326       --%
                                  -----------   -----------    --------    -----------     -----
Total premiums..................  $    89,848   $     9,687    $  1,036    $    81,197     1.28%
                                  ===========   ===========    ========    ===========     =====
</TABLE>

                                       S-12
<PAGE>   111

                                AMERUS GROUP CO.

                                   SCHEDULE V
                       VALUATION AND QUALIFYING ACCOUNTS
                        DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                               PROVISIONS
                                       BALANCE AT   CHARGED TO   CHARGED TO   ON MORTGAGES
                                       BEGINNING    COSTS AND    MORTGAGES      SOLD OR       BALANCE AT
                                       OF PERIOD     EXPENSES     ACQUIRED    TRANSFERRED    END OF PERIOD
                                       ----------   ----------   ----------   ------------   -------------
                                                                 (IN THOUSANDS)
<S>                                    <C>          <C>          <C>          <C>            <C>
Mortgage Loans
     2000...........................    $18,046      $  (150)     $(2,225)      $    --         $15,671
     1999...........................    $22,299      $   144      $(4,397)      $    --         $18,046
     1998...........................    $15,284      $(2,259)     $10,374       $(1,100)        $22,299
</TABLE>

                                       S-13