<PAGE>   1



                                   EXHIBIT 2.7

                                                                  EXECUTION COPY

                 AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER


This AMENDMENT NO. 1 ("Amendment") is made as of this 18th day of February,
2000, to the Agreement and Plan of Merger dated December 17, 1999, by and
between American Mutual Holding Company, an Iowa mutual insurance holding
company ("AMHC"), and AmerUs Life Holdings, Inc., an Iowa corporation ("AMH")
(the "Merger Agreement").

                                    RECITALS

WHEREAS, the respective Boards of Directors of AMHC and AMH have approved and
will recommend to its members and stockholders, respectively, the approval of
the Merger Agreement and this Amendment whereby AMH shall merge with and into
AMHC, subject to the terms set forth therein and herein (the "Merger");

WHEREAS, subsequent to the date of the Merger Agreement, AMHC and AMH entered
into a Combination and Investment Agreement (the "Combination Agreement"), by
and among AMHC, AMH, Indianapolis Life Insurance Company, an Indiana mutual
insurance company ("Indianapolis Life") and The Indianapolis Life Group of
Companies, Inc., an Indiana corporation ("ILGC"), pursuant to which among other
things, AMHC, AMH, Indianapolis Life and ILGC will enter into a strategic
combination pursuant to a series of transactions in which AMHC and AMH will
first complete the Restructuring (as defined in the Plan) and Indianapolis Life
will thereafter complete a plan of conversion under applicable provisions of the
insurance law of the State of Indiana (the "Indianapolis Life Demutualization")
with Indianapolis Life remaining an Indiana domiciled life insurance company
while becoming an indirect wholly-owned stock subsidiary of AMHC upon completion
of the Indianapolis Life Demutualization;

WHEREAS, the Combination Agreement requires that AMHC and/or AMH invest $100
million in ILGC ("ILGC Investment") in return for 105.96 shares of non-voting
common stock of ILGC which represents 45% of the equity in ILGC (the non-voting
common stock will be exchangeable for ILGC voting stock upon receipt of
regulatory approval for such exchange); and

WHEREAS, the Board of Directors of AMH adopted on February 11, 2000, the AmerUs
Life Holdings, Inc. 2000 Stock Option Plan (the "AMH 2000 Stock Option Plan");
and

WHEREAS, the parties desire to amend the Merger Agreement to provide for
treatment of the ILGC Investment, AMH 2000 Stock Option Plan and other matters.

NOW, THEREFORE, the parties agree as follows:



<PAGE>   2



1. The last sentence of Section 3.7 is amended by striking such sentence in its
entirety and substituting in lieu thereof the following sentence:

"At the Effective Time, AMHC shall assume and adopt the AmerUs Life Holdings,
Inc. Non-Employee Director Stock Plan, the AmerUs Life Holdings, Inc. 1999
Non-Employee Stock Option Plan, the AmerUs Life Holdings, Inc. Stock Incentive
Plan, the AmerUs Group Co. MIP Deferral Plan and the AmerUs Life Holdings, Inc.
2000 Stock Option Plan, as each such plan is maintained and administered by AMH
at the Effective Time."

2. The following is added as Section 6.2(d) to the Agreement:

         "(d) Purchase Agreement. AMH shall have performed or complied in all
         respects with the terms of the Purchase Agreement, dated February 18,
         2000, between AMH and AMHC."

3. The following is added as Section 8.7 to the Agreement:

         Section 8.7 Monetization of Non-Insurance Subsidiaries and ILGC Common
Stock. Each of AMHC and AMH agrees that upon consummation of the transactions
contemplated hereby, the Surviving Corporation shall be obligated to make
appropriate credit to Net Cash Proceeds with respect to the Non-Insurance
Subsidiaries and ILGC Common Stock and to make distributions to those persons
who are Eligible Members of AMHC, in each such case to the extent required by
and in accordance with the Plan. "Net Cash Proceeds," "Non-Insurance
Subsidiaries," "ILGC Common Stock," and "Eligible Members" shall all have the
meanings given such terms in the Plan.

4. Except as set forth herein, the Agreement remains in full force and effect
   and unmodified.

5. Capitalized terms used but not defined herein shall have the meanings given
   such terms in the Merger Agreement.

         IN WITNESS WHEREOF, each of AMH and AMHC has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.

                                            AMERICAN MUTUAL HOLDING COMPANY



                                            By: s/ Roger K. Brooks
                                                -------------------------------
                                                Name:  Roger K. Brooks
                                                Title: Chairman, President & CEO

                                      -2-
<PAGE>   3

                                       AMERUS LIFE HOLDINGS, INC.



                                       By: s/ Michael G. Fraizer
                                           -------------------------------
                                           Name:  Michael G. Fraizer
                                           Title: Executive Vice President & CFO


                                      -3-