AMERUS LIFE HOLDINGS INC, S-1/A, 1996-11-07

AMERUS LIFE HOLDINGS INC
S-1/A, 1996-11-07
LIFE INSURANCE

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 7, 1996

REGISTRATION NO. 333-12239

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

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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AMERUS LIFE HOLDINGS, INC.
(Exact name of registrant as specified in its Articles of Incorporation)

<TABLE>
<S> <C> <C>
IOWA 6719 42-1459712
(State or other (Primary Standard (IRS Employer
jurisdiction of Industrial Classification Identification
incorporation or Code Number) No.)
organization)
</TABLE>

418 SIXTH AVENUE
DES MOINES, IOWA 50306-2499
(515) 280-1331
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

JAMES A. SMALLENBERGER
SENIOR VICE PRESIDENT AND SECRETARY
AMERUS LIFE HOLDINGS, INC.
418 SIXTH AVENUE
DES MOINES, IOWA 50306-2499
(515) 280-1331
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------

Copies to:

<TABLE>
<S> <C>
RICHARD G. CLEMENS, ESQ. WILLIAM D. TORCHIANA, ESQ.
SIDLEY & AUSTIN SULLIVAN & CROMWELL
ONE FIRST NATIONAL PLAZA 125 BROAD STREET
CHICAGO, ILLINOIS 60603 NEW YORK, NEW YORK 10004
(312) 853-7642 (212) 558-4000
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>

SUBJECT TO COMPLETION, DATED NOVEMBER 7, 1996

5,000,000 SHARES

AMERUS LIFE HOLDINGS, INC.

CLASS A COMMON STOCK
(NO PAR VALUE)
--------------

Of the 5,000,000 shares of Class A Common Stock of AmerUs Life Holdings,
Inc., an Iowa corporation, offered hereby (the "Shares"), 2,500,000 Shares are
being offered by the Company and 2,500,000 Shares are being offered by the
Company's parent corporation, AmerUs Group ("AmerUs Group" or the "Selling
Shareholder"). See "Ownership of Common Stock." The Shares are being offered on
a non-underwritten basis to eligible policyowners as of June 30, 1996 (the
"Subscription Policyowners") pursuant to nontransferable subscription rights
(the "Subscription Offering"). See "Ownership of Common Stock." The Company will
not receive any of the proceeds from the sale of Shares being offered by the
Selling Shareholder. The Company and the Selling Shareholder intend to offer all
or a portion of the Shares not subscribed for in the Subscription Offering to
the public in a subsequent underwritten public offering, the closing of which
would occur contemporaneously with the closing of the Subscription Offering (the
"Public Offering," and together with the Subscription Offering, the
"Offerings"). See "The Subscription Offering" and "The Public Offering."

The Company has two classes of authorized common stock, no par value (the
"Common Stock"), consisting of (i) the Class A Common Stock, which has one vote
per share, and (ii) the Class B Common Stock, the holder of which shall at all
times have a majority of the voting power of the Common Stock. Under Iowa law,
the Class B Common Stock must be held, directly or indirectly, by American
Mutual Holding Company, an Iowa mutual insurance holding company ("AMHC"), and
is automatically convertible into Class A Common Stock in the event of the
demutualization of AMHC. Following the Offerings, AMHC will own, directly or
indirectly, 71% of the Company's Class A Common Stock (assuming no exercise of
the underwriters' over-allotment option in the Public Offering) and 100% of the
Class B Common Stock, which together will represent 77% of the voting power of
the Common Stock and 77% of the economic value of the Company. See "Risk
Factors--Control by AMHC; Anti-Takeover Effects of Iowa Law and the Company's
Articles of Incorporation and Bylaws" and "Description of the Capital Stock."

The issuance of Shares in the Subscription Offering is contingent upon the
sale by the Company and the Selling Shareholder of Shares in the Offerings in an
aggregate amount of $50 million. Subscribers for Shares in the Subscription
Offering may subscribe for a minimum of 100 Shares and a maximum of 5,000
Shares. There can be no assurance that subscribers for the Shares in the
Subscription Offering will in fact be able to purchase such Shares, because the
Company may in its sole discretion determine to cancel or rescind the
Subscription Offering at any time prior to the closing of the Subscription
Offering. See "The Subscription Offering."

Upon consummation of the Offerings, the Company expects, subject to market
conditions, to sell trust preferred securities to the public in an aggregate
amount of up to $75 million pursuant to a separate prospectus (the "Preferred
Offering"). See "The Preferred Offering."

Prior to the Offerings, there has been no public market for the Class A
Common Stock of the Company. The price of the Shares in the Subscription
Offering (the "Subscription Price") will be per Share. The Subscription Price
was set by the Company and the Selling Shareholder after consultation with their
financial advisors. If the Subscription Price is greater than the price per
share to the public in the Public Offering (the "Public Offering Price") or the
Revised Subscription Price (as defined herein) the Company and the Selling
Shareholder will issue refunds to subscribing policyowners in the form of a
check equal to the amount of such difference multiplied by the number of Shares
subscribed for by each such policyowner. See "The Subscription Offering." If the
Public Offering Price or the Revised Subscription Price is more than the
Subscription Price, subscribers will not be required to pay any additional
amounts for the Shares subscribed for, nor will there be any adjustment in the
number of Shares issued to them. See "The Subscription Offering."

Application has been made for quotation of the Class A Common Stock on the
Nasdaq National Market under the symbol "AMRS".

THE SUBSCRIPTION OFFERING EXPIRES AT 4:00 P.M., NEW YORK TIME, ON TUESDAY,
DECEMBER 3, 1996 (THE "SUBSCRIPTION EXPIRATION DATE"). SUBSCRIPTION ORDER FORMS
AND PAYMENT IN FULL FOR THE SHARES BEING SUBSCRIBED FOR MUST BE RECEIVED BY
CHASEMELLON SHAREHOLDER SERVICES, L.L.C. (THE "TRANSFER AND ESCROW AGENT") NOT
LATER THAN 4:00 P.M., NEW YORK TIME, ON THE SUBSCRIPTION EXPIRATION DATE.
SUBSCRIPTIONS FOR SHARES ARE IRREVOCABLE BY THE SUBSCRIBER.

Subscription funds will be held in an escrow account with the Transfer and
Escrow Agent pending consummation of the Subscription Offering or the refund of
such funds to subscribers. Please read this Prospectus for additional
information on subscription procedures and on other aspects of this Subscription
Offering.

SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR A DISCUSSION OF CERTAIN
CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE CLASS A COMMON STOCK.
--------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------

<TABLE>
<CAPTION>
SUBSCRIPTION PROCEEDS TO THE
PRICE(1) COMPANY(2)
----------------- ---------------------
<S> <C> <C>
Per Share...................................................... $ $
Total................................................Minimum(4) $ 0 $ 0
Maximum(5) $ $

<CAPTION>
PROCEEDS TO THE
SELLING SHAREHOLDER(3)
---------------------------
<S> <C>
Per Share...................................................... $
Total................................................Minimum(4) $ 0
Maximum(5) $
</TABLE>

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(1) If the Public Offering Price or the Revised Subscription Price (as defined
herein) is less than the Subscription Price, the Company and the Selling
Shareholder will issue refunds to subscribing policyowners in the form of a
check equal to the amount of such difference multiplied by the number of
Shares subscribed for by each such policyowner. See "The Subscription
Offering."

(2) Before deducting expenses of the Subscription Offering payable by the
Company, estimated to be $1,037,500.

(3) Before deducting expenses of the Subscription Offering payable by the
Selling Shareholder, estimated to be $1,037,500.

(4) Assumes no Shares are sold in the Subscription Offering.

(5) Assumes all Shares are sold in the Subscription Offering.

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

The date of this Prospectus is , 1996.
<PAGE>
AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form S-1 (including all amendments
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act") with respect to the Class A Common Stock offered
hereby. As permitted by the rules and regulations of the Commission, this
Prospectus omits certain information contained in the Registration Statement.
For further information with respect to the Company and the Class A Common Stock
offered hereby, reference is hereby made to the Registration Statement and to
the exhibits and schedules filed therewith. Statements contained in this
Prospectus regarding the contents of any agreement or other document filed as an
exhibit to the Registration Statement are not necessarily complete, and in each
instance reference is made to the copy of such agreement filed as an exhibit to
the Registration Statement, each such statement being qualified in all respects
by such reference. The Registration Statement, including the exhibits and
schedules thereto, may be inspected at the public reference facilities
maintained by the Commission at Room 204, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, DC 20549; Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661; and Seven World Trade Center, New York, New York 10048; and
copies of all or any part thereof may be obtained from such office upon payment
of the prescribed fees. The Commission maintains a Web site (http://www.sec.gov)
that contains reports, proxy and information statements and other information
regarding registrants who file electronically with the Commission.

As a result of the Offerings, the Company will be subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). So long as the Company is subject to the periodic
reporting requirements of the Exchange Act, it will continue to furnish the
reports and other information required thereby to the Commission. The Company
intends to furnish holders of the Class A Common Stock with annual reports
containing, among other information, audited consolidated financial statements
certified by an independent public accounting firm and quarterly reports
containing unaudited condensed consolidated financial information for the first
three quarters of each fiscal year. The Company also intends to furnish such
other reports as it may determine or as may be required by law.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE IOWA
COMMISSIONER OF INSURANCE NOR HAS THE IOWA COMMISSIONER OF INSURANCE RULED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
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THIS PROSPECTUS RELATES SOLELY TO THE SUBSCRIPTION OFFERING AND DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, COMMON STOCK
IN THE ANTICIPATED PUBLIC OFFERING. COMMON STOCK, IF ANY, TO BE OFFERED IN THE
ANTICIPATED PUBLIC OFFERING WILL BE OFFERED ONLY BY MEANS OF A SEPARATE
PROSPECTUS.
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IN CONNECTION WITH THE PUBLIC OFFERING THAT MAY FOLLOW THIS SUBSCRIPTION
OFFERING, THE UNDERWRITERS FOR SUCH PUBLIC OFFERING MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE OVER-
THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

2
<PAGE>
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THE PLAN OF REORGANIZATION OF AMERICAN MUTUAL LIFE INSURANCE COMPANY AND
IOWA LAW REQUIRE AMHC AT ALL TIMES TO OWN DIRECTLY, OR INDIRECTLY THROUGH ONE OR
MORE INTERMEDIATE HOLDING COMPANY SUBSIDIARIES, SHARES OF CAPITAL STOCK WHICH
CARRY THE RIGHT TO CAST A MAJORITY OF THE VOTES ENTITLED TO BE CAST BY ALL OF
THE OUTSTANDING SHARES OF THE CAPITAL STOCK AT A SHAREHOLDERS' MEETING OF THE
COMPANY. ANY ATTEMPT TO EFFECT ANY TRANSACTION PURSUANT TO WHICH AMHC WOULD NO
LONGER HAVE SUCH VOTING MAJORITY WOULD BE NULL AND VOID AND INEFFECTUAL TO
TRANSFER SUCH VOTING RIGHTS.
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THE IOWA INSURANCE HOLDING COMPANY SYSTEMS STATUTE APPLICABLE TO THE COMPANY
PROVIDES THAT NO PERSON MAY SEEK TO ACQUIRE CONTROL OF THE COMPANY, AND THUS
INDIRECT CONTROL OF AMERUS LIFE, WITHOUT THE PRIOR APPROVAL OF THE IOWA
COMMISSIONER OF INSURANCE. GENERALLY, ANY PERSON WHO DIRECTLY OR INDIRECTLY
OWNS, CONTROLS, HOLDS WITH POWER TO VOTE OR HOLDS PROXIES REPRESENTING 10% OR
MORE OF THE COMPANY'S VOTING SECURITIES (CONSISTING OF THE COMBINED OUTSTANDING
SHARES OF CLASS A COMMON STOCK AND CLASS B COMMON STOCK) WOULD BE PRESUMED TO
HAVE ACQUIRED SUCH CONTROL, UNLESS SUCH PRESUMPTION IS REBUTTED BY A SHOWING
THAT SUCH CONTROL DOES NOT EXIST IN FACT.
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FOR NORTH CAROLINA INVESTORS: THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS SUCH
COMMISSIONER RULED UPON THE ACCURACY OR THE ADEQUACY OF THE PROSPECTUS.
--------------

3
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
DETAILED INFORMATION, CONSOLIDATED FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. CERTAIN INSURANCE TERMS AND
OTHER CAPITALIZED TERMS USED IN THIS PROSPECTUS ARE DEFINED IN THE "GLOSSARY OF
CERTAIN INSURANCE AND OTHER DEFINED TERMS" HEREIN AND ARE PRINTED IN BOLD THE
FIRST TIME THEY APPEAR IN TEXT BELOW. FOR PURPOSES OF THIS PROSPECTUS, THE TERM
"COMPANY" REFERS TO AMERUS LIFE HOLDINGS, INC. AND ITS SUBSIDIARIES,
COLLECTIVELY, UNLESS THE CONTEXT OTHERWISE REQUIRES. THE TERM "AMERUS LIFE"
REFERS AT ALL TIMES TO AMERUS LIFE INSURANCE COMPANY AND ITS SUBSIDIARIES. THE
TERM "AMERICAN MUTUAL LIFE" REFERS TO AMERICAN MUTUAL LIFE INSURANCE COMPANY
PRIOR TO ITS CONVERSION INTO A STOCK LIFE COMPANY AND NAME CHANGE TO AMERUS LIFE
INSURANCE COMPANY ON JUNE 30, 1996, EXCLUDING AMERUS PROPERTIES, INC. ("API"),
AMERUS BANK, AND IOWA REALTY CO., INC., AND EACH OF THEIR RESPECTIVE
SUBSIDIARIES (THE "NON-LIFE INSURANCE SUBSIDIARIES"). THE TERM "PLAN" REFERS TO
THE PLAN OF REORGANIZATION OF AMERICAN MUTUAL LIFE DATED OCTOBER 27, 1995, THE
EFFECTIVE DATE OF WHICH WAS JUNE 30, 1996.

THE INFORMATION CONTAINED IN THIS PROSPECTUS, GIVES EFFECT TO (I) THE
REORGANIZATION (AS DEFINED HEREIN) OF AMERICAN MUTUAL LIFE AND (II) THE
DISTRIBUTION BY AMERUS LIFE OF ITS NON-LIFE INSURANCE SUBSIDIARIES (THE
"DISTRIBUTION") TO AMERUS GROUP CO. ("AMERUS GROUP" OR THE "SELLING
SHAREHOLDER"), THE COMPANY'S IMMEDIATE PARENT CORPORATION, AS IF BOTH HAD BEEN
COMPLETED AT THE BEGINNING OF THE PERIODS IDENTIFIED HEREIN AND ASSUMES THAT,
DURING THE PERIODS PRESENTED, THE COMPANY OWNED AND OPERATED THE ASSETS IT WILL
OWN AS A RESULT OF SUCH REORGANIZATION AND DISTRIBUTION. THE INFORMATION
CONTAINED HEREIN, UNLESS OTHERWISE INDICATED, DOES NOT GIVE EFFECT TO A CAPITAL
CONTRIBUTION ( THE "CAPITAL CONTRIBUTION") BY AMERUS LIFE TO OR FOR THE BENEFIT
OF CERTAIN OF THE NON-LIFE INSURANCE SUBSIDIARIES OF CASH AND OTHER PROPERTY
HAVING AN APPROXIMATE NET CARRYING VALUE OF $79 MILLION. UNLESS OTHERWISE
SPECIFIED, THE INFORMATION CONTAINED HEREIN ASSUMES NO EXERCISE OF THE
UNDERWRITERS' OVER-ALLOTMENT OPTION IN THE PUBLIC OFFERING.

ALL FINANCIAL INFORMATION IN THIS PROSPECTUS IS PRESENTED IN ACCORDANCE WITH
UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES FOR LIFE INSURANCE
COMPANIES ("GAAP") UNLESS OTHERWISE SPECIFIED. STATUTORY DATA INCLUDED HEREIN
HAVE BEEN DERIVED FROM THE ANNUAL AND QUARTERLY STATEMENTS OF AMERICAN MUTUAL
LIFE AS FILED WITH INSURANCE REGULATORY AUTHORITIES AND PREPARED IN ACCORDANCE
WITH STATUTORY ACCOUNTING PRACTICES.

THE COMPANY

The Company is engaged in the business of marketing, UNDERWRITING and
distributing a broad range of individual life insurance and ANNUITY products to
individuals and businesses in 45 states and the District of Columbia. The
Company's primary product offerings consist of WHOLE LIFE, UNIVERSAL LIFE and
TERM LIFE INSURANCE policies and FIXED ANNUITIES. In addition, on April 1, 1996
the Company acquired a 34% interest in a variable life insurance and annuity
company through a joint venture arrangement (the "Ameritas Joint Venture") with
Ameritas Life Insurance Corp. ("Ameritas"). The Company's distribution systems
now market fixed annuities issued by Ameritas Variable Life Insurance Company
("AVLIC") and have begun to sell AVLIC's variable life insurance and VARIABLE
ANNUITY products. Based on published comparisons and rankings of life insurance
and annuity products, the Company believes that its products have a long history
of being competitive within the industry.

The Company's subsidiary, AmerUs Life, was originally incorporated in 1896
as a mutual insurance company under the name Central Life Assurance Society of
the United States. Its name was changed to American Mutual Life Insurance
Company in 1994 following the merger of American Mutual Life Insurance Company
("Old AML") into Central Life Assurance Company ("Central Life"). On June 30,
1996, American Mutual Life was converted into a stock life insurance company
pursuant to the Plan and its name was changed to AmerUs Life. As of September
30, 1996, AmerUs Life had approximately 418,000 life insurance POLICIES and
annuity contracts outstanding and individual life insurance IN FORCE, net of

4
<PAGE>

REINSURANCE, of approximately $26.1 billion. As of September 30, 1996, the
Company had total assets of $4.3 billion and total shareholders' equity of $437
million (prior to the Offerings, after giving effect to the Capital
Contribution).

The Company's target markets are individuals in the middle and upper income
brackets and small businesses. Its geographic focus is national in scope (except
for Connecticut, Maine, New Hampshire, New York and Vermont, in which the
Company is not licensed to do business), and it primarily serves suburban and
rural areas. The Company distributes its products primarily through a
combination of CAREER GENERAL AGENCY and PERSONAL PRODUCING GENERAL AGENCY
("PPGA") distribution systems, as well as a network of independent brokers. The
career general agency system consists of a network of 33 career general
agencies, with approximately 550 career agents. The PPGA system is comprised of
approximately 425 PPGAs, with approximately 950 agents. Career agents and agents
in the PPGA system do not contract exclusively with the Company. Variable life
insurance products and the fixed and variable annuities offered by the Ameritas
Joint Venture are marketed through the Company's distribution systems and the
distribution systems of Ameritas and AVLIC, which consist of approximately 250
agents and 450 independent broker-dealers (with approximately 7,500 registered
representatives), respectively.

AmerUs Life's claims-paying ability is rated "AA-" (Very high) by DUFF &
PHELPS and "A" (Good) by STANDARD & POOR'S. AmerUs Life is rated "A" (Excellent)
by A.M. Best and "A2" (Good) by MOODY'S. See "Risk Factors--Importance of
Ratings" and "Glossary of Certain Insurance and Other Defined Terms" under the
captions Duff & Phelps, Standard & Poor's, A.M. Best and Moody's.

BUSINESS STRATEGY

The Company's business strategy to achieve earnings growth and increase
shareholder value is focused on managing certain operating fundamentals that
historically have compared favorably to the industry. The Company intends to
utilize these operating strengths to differentiate its products by maintaining
its position and reputation as a low-cost producer that provides high-value
products to its life insurance and annuity customers, while also providing
superior service to both agents and customers. The Company believes it is well
positioned to compete effectively based upon a number of strengths including its
strong operating performance, customer-driven product offerings, productive and
diversified distribution systems, sophisticated asset/liability management
capabilities and a customer service orientation. In addition, the Company
intends to continue to seek new business opportunities through mergers,
acquisitions and strategic alliances.

The Company believes that its operating performance is significantly
impacted by four basic elements: (i) MORTALITY, (ii) PERSISTENCY, (iii)
operating expenses, and (iv) investment yield. The Company believes that its
results for each of these basic elements for the last several years have been
strong. In addition to realizing efficiencies from reduced personnel and data
processing costs from the merger of Old AML into Central Life in 1994, the
Company has benefited from its efficient use of technology, its advanced
customer service systems, its variable-cost based distribution system, and its
sophisticated asset/liability management system.

The Company has other strengths which enable it to compete effectively in
the industry. Based on published comparisons and rankings of life insurance and
annuity products, the Company believes that its products have a long history of
being competitive within the industry. See "Business--Products." The Company
also has a productive and diversified distribution system, with a non-exclusive
distribution network comprised of a career general agency system, a PPGA system,
distribution channels available to it through the Ameritas Joint Venture and a
sales network of certain of the Company's affiliates. In response to competition
among insurance companies for agents with demonstrated ability, the Company
provides agents in both its career general agency and the PPGA systems with
financial incentives based on their volume of sales of the Company's products.
See "Risk Factors--Competitive Environment" for additional discussion of

competitive factors in the insurance industry.

5
<PAGE>

Management believes that mergers, acquisitions and strategic alliances will
be necessary to more fully utilize the Company's distribution and administrative
capacity and to obtain improved economies of scale and a lower cost structure.
The Company's access to the capital markets provides it with the financial
flexibility to selectively pursue acquisitions. The Company has historically
sought mergers, acquisitions and strategic alliances with the goal of improving
its position in existing market segments or entering desirable new market
segments. Based on the Company's success in identifying and effectively
implementing mergers, acquisitions and strategic alliances, management intends
to actively and selectively participate in such transactions in the future as a
means to further enhance shareholder value. Notable recent activities include
the combination by merger of Old AML into Central Life in 1994, and the Ameritas
Joint Venture which was completed in April 1996.

CONTROLLING SHAREHOLDER

Following the Offerings, AMHC will continue to be the indirect controlling
shareholder of the Company through its ownership of AmerUs Group. After the
Offerings, AmerUs Group will own all five million of the outstanding shares of
Class B Common Stock and 12 million of the outstanding shares of Class A Common
Stock, representing approximately 77% of the combined voting power of the Class
A Common Stock and Class B Common Stock. AMHC acquired its ownership interest in
the Company as a result of the Reorganization, pursuant to which American Mutual
Life formed AMHC as a mutual insurance holding company and American Mutual Life
was converted into a stock life insurance company as a wholly owned subsidiary
of AMHC. See "The Reorganization and Distribution of the Non-Life Insurance
Subsidiaries."

6
<PAGE>
ORGANIZATIONAL STRUCTURE

The following chart illustrates the general organization of AMHC and its
subsidiaries, including the Company, after the Offerings:

[GRAPH]

* Assuming no exercise of the underwriters' over-allotment option in the
Public Offering.

** The Non-Life Insurance Subsidiaries consist of API, AmerUs Bank, and Iowa
Realty Co., Inc., and each of their respective subsidiaries.

*** AmerUs Life participates in the Ameritas Joint Venture through its ownership
interest in AMAL Corporation, a Nebraska corporation ("AMAL"). See
"Business--Ameritas Joint Venture."

7
<PAGE>
THE REORGANIZATION AND DISTRIBUTION OF THE NON-LIFE INSURANCE SUBSIDIARIES

On October 27, 1995, the Board of Directors of American Mutual Life adopted
the Plan, which authorized American Mutual Life to reorganize into a mutual
insurance holding company structure (the "Reorganization"). The Iowa
Commissioner of Insurance (the "Iowa Commissioner") held a public hearing on the
Reorganization on November 21, 1995. The Plan was approved by American Mutual
Life's policyowners on November 28, 1995, and the Iowa Commissioner approved the
Plan on December 13, 1995. The Reorganization became effective on June 30, 1996
(the "Effective Date"). American Mutual Life was the first company to obtain
approval under the Iowa mutual insurance holding company statute to form a
mutual insurance holding company.

Pursuant to the Reorganization, American Mutual Life formed AMHC as a mutual
insurance holding company and American Mutual Life was converted into a stock
life insurance company and its name was changed to AmerUs Life Insurance
Company. As part of the Reorganization, the policyowners' contract rights in
their insurance policies and annuities remained with AmerUs Life and the
policyowners automatically became MEMBERS of AMHC, and thereby became entitled
to vote for directors of AMHC. Purchasers of insurance policies and annuities
from AmerUs Life after the Reorganization automatically become members of AMHC
(subject to certain exceptions and conditions set forth in the Plan). AMHC may,
among other things, elect all of the directors of the Company and approve
matters submitted for shareholder approval. Conflicts of interest between the
Company and AMHC may arise. See "Risk Factors--Relationship with AMHC; Potential
Conflicts of Interest" and "Certain Transactions and Relationships."

Prior to the Distribution, AmerUs Life made the Capital Contribution to or
for the benefit of certain of the Non-Life Insurance Subsidiaries. The net
assets contributed in the Capital Contribution had an aggregate carrying value
of approximately $79 million as of the date of contribution. Following the
Capital Contribution, a series of transactions was undertaken by the Company and
its AFFILIATES. AmerUs Life effected the Distribution, pursuant to which it
distributed the Non-Life Insurance Subsidiaries to AmerUs Group. Immediately
after the Distribution, AmerUs Group contributed all of its shares of common
stock in AmerUs Life to the Company. Under this structure, the Company is an
intermediate holding company, with AmerUs Group as its direct parent company and
AmerUs Life as its wholly-owned subsidiary. Under Iowa law, AMHC is required to
retain direct or indirect ownership and control of shares representing a
majority of the vote of the outstanding capital stock of the Company.
Immediately following the Distribution, the Company entered into a bank credit
facility pursuant to which it borrowed $100 million in term debt and $75 million
under a revolving line of credit (the "Bank Credit Facility"). The Company used
the proceeds from such borrowings to make a $125 million capital contribution to
AmerUs Life and to purchase a $50 million surplus note from AmerUs Life. The
Company will use certain proceeds of the Offerings and the Preferred Offering
(as defined below) to repay such borrowings.

The Distribution effectively separated AMHC's non-life insurance businesses
from the life insurance businesses owned by the Company, such that the companies
engaged in non-life insurance businesses are no longer subsidiaries of the
Company. See "The Reorganization and Distribution of the Non-Life Insurance
Subsidiaries."

8
<PAGE>
THE SUBSCRIPTION OFFERING

The Shares are being offered by the Company and the Selling Shareholder in
the Subscription Offering in accordance with the priority subscription rights
provided under the Plan to eligible policyowners of AmerUs Life as of June 30,
1996 ("Subscription Policyowners"). Subscription Policyowners may purchase
between 100 and 5,000 whole Shares in the Subscription Offering at a per share
price of $
(the "Subscription Price"), subject to adjustment if (i) the Public Offering
Price or the Revised Subscription Price (as defined below) is less than the
Subscription Price or (ii) if the Subscription Offering is oversubscribed. While
it is currently the intention of the Company and the Selling Shareholder to
offer all or a portion of the Shares not subscribed for in the Subscription
Offering to the public in the Public Offering and to close the Subscription
Offering contemporaneously with the closing of the Public Offering, the Company
and the Selling Shareholder may close the Subscription Offering without
commencing or closing the Public Offering in the event the Company and the
Selling Shareholder receive, in the aggregate, $50 million or more in gross
proceeds in the Subscription Offering. In the event that the Company and the
Selling Shareholder determine that the closing of the Subscription Offering
shall occur without undertaking the Public Offering and provided that the
Company and the Selling Shareholder elect to proceed with the Subscription
Offering, then the Company and the Selling Shareholder will determine, after
consultation with their financial advisors and a review of market conditions,
the recent prices of stocks of comparable companies which are publicly traded
and other factors customarily considered in determining an initial offering
price, the price per share at which the Common Stock would trade in the public
market on the closing of the Subscription Offering (the "Revised Subscription
Price"). If the Public Offering Price or the Revised Subscription Price is more
than the Subscription Price, subscribers will not be required to pay any
additional amounts for the Shares subscribed for, nor will there be any
adjustment in the number of Shares issued to them. See "The Subscription
Offering-- Subscription Price and Payment for Shares."

<TABLE>
<S> <C>
Class A Common Stock Offered by the
Company Pursuant to the Subscrip-
tion Offering...................... 2,500,000 shares
Class A Common Stock Offered by the
Selling Shareholder pursuant to the
Subscription Offering.............. 2,500,000 shares
Class A Common Stock to be Out-
standing Immediately After the
Offerings.......................... 17,000,000 shares. (Assumes that all Shares offered
pursuant to the Subscription Offering are sold in the
Subscription Offering and/or the Public Offering and
that the underwriters for the Public Offering do not
exercise their over-allotment option.)
Class B Common Stock to be Out-
standing Immediately After the
Offerings.......................... 5,000,000 shares
Proposed Nasdaq Symbol.............. AMRS
Voting Rights....................... The Class A Common Stock has one vote per share. The
voting rights of the Class B Common Stock provide the
holder of the Class B Common Stock with a majority of
the voting power of the Class A Common Stock and the
Class B Common Stock combined. Both classes generally
vote together as a single class on all matters,
except that the holders of Class A Common Stock and
the holders of Class B Common Stock will vote
separately as a class with respect to certain matters
for which class voting is required under Iowa law.
See "Description of the Capital Stock."
</TABLE>

9
<PAGE>

<TABLE>
<S> <C>
Use of Proceeds..................... The amount of proceeds from the Offerings, if any,
will vary according to, among other things, the total
number of Shares subscribed for by Subscription
Policyowners. Assuming that the Public Offering Price
(or the Revised Subscription Price if the Public
Offering is not consummated) is equal to $15.50 per
Share, the net proceeds to the Company from the
Offerings are expected to be approximately $35
million after deducting the Company's share of the
estimated expenses of the Offerings. All such
estimated net proceeds will be used by the Company to
repay debt outstanding under the Bank Credit
Facility. The Company will not receive any proceeds
from the sale of Class A Common Stock by the Selling
Shareholder. See "Use of Proceeds," "The Subscription
Offering" and "The Public Offering."
Dividend Policy..................... Subject to the Company's financial results,
applicable regulatory constraints and declaration by
the Board of Directors of the Company, the Company
currently intends to pay a quarterly dividend of
$ per share of Common Stock commencing with the
quarter ending on March 31, 1997. However, there can
be no assurance that the Company will declare and pay
any dividends. See "Risk Factors--Holding Company
Structure; Limitation on Dividends" and "Dividend
Policy."
Subscription Price.................. $ per share. If the Public Offering Price or the
Revised Subscription Price is less than the
Subscription Price, the Company will issue refunds to
subscribing policyowners in the form of a check equal
to the amount of such difference multiplied by the
number of Shares subscribed for by each such
policyowner. If the Subscription Price is less than
the Public Offering Price or the Revised Subscription
Price, subscribers will not be required to pay any
additional amounts for the Shares subscribed for. See
"The Subscription Offering."
Subscription Minimum and Maximum.... The minimum number of Shares a Subscription
Policyowner is entitled to subscribe for is 100. The
maximum number of Shares a Subscription Policyowner
is entitled to subscribe for is 5,000. In the event
that Subscription Policyowners in the aggregate
subscribe for more than 5 million Shares (the amount
of Shares being offered hereby), Subscription Poli-
cyowners will be permitted to purchase, to the extent
possible, 100 shares and thereafter will receive a
pro-rated number of Shares in the same proportion
that the subscription of each bears to the total
subscriptions received by the Company in the
Subscription Offering. The Company will issue refunds
to each Subscription Policyowner for Shares sub-
scribed for but not received. See "The Subscription
Offering."
Subscription Procedures............. Together with this Prospectus, the Company is
delivering to each Subscription Policyowner a
subscription order form pursuant to which such
Subscription Policyowner shall have the right to
subscribe for Shares.
</TABLE>

10
<PAGE>

<TABLE>
<S> <C>
To exercise the right to subscribe for Shares, a
Subscription Policyowner must complete and sign the
subscription order form and such form must be
received, together with payment in full for the
Shares subscribed for, by the Transfer and Escrow
Agent not later than 4:00 p.m., New York time, on the
Subscription Expiration Date. Payment for the Shares
shall be made by check or money order in United
States dollars. SUBSCRIPTIONS FOR SHARES ARE
IRREVOCABLE BY THE SUBSCRIBER.
Subscription order forms received by the Transfer and
Escrow Agent may not be modified, amended or
rescinded without the consent of the Company. See
"The Subscription Offering."
Subscription Expiration Date........ The Subscription Offering expires at 4:00 p.m., New
York time, on Tuesday, December 3, 1996. Properly
executed subscription order forms must be received,
together with payment in full for the Shares
subscribed for, by the Transfer and Escrow Agent by
such time on such date. See "The Subscription
Offering."
Cancellation of Subscription The Company may in its sole discretion at any time
Offering........................... prior to the closing of the Subscription Offering
determine to cancel or rescind the Subscription
Offering. See "The Subscription Offering."
Escrow of Subscription Funds........ Subscription funds will be held in an escrow account
with the Transfer and Escrow Agent pending
consummation of the Subscription Offering or the
refund of such funds to subscribers. If the Company
cancels the Subscription Offering, payments made by
subscribers will be promptly refunded with interest
at a rate of 3.5% simple interest per annum (the
"Subscription Interest Rate"). If the period from the
Subscription Expiration Date to the closing of the
Subscription Offering exceeds 60 days, interest will
be paid to each subscriber on all subscription
amounts at the Subscription Interest Rate from such
sixtieth day until the closing of the Subscription
Offering. Except as described above, interest will
not be paid on subscription funds. See "The Subscrip-
tion Offering."
Subscription Agent.................. The Chicago Corporation
Transfer and Escrow Agent........... ChaseMellon Shareholder Services, L.L.C.
</TABLE>

11
<PAGE>
THE PUBLIC OFFERING

If the Shares offered hereby are not fully subscribed for in the
Subscription Offering, the Company and the Selling Shareholder intend to sell
all or a portion of such Shares in an underwritten offering (the "Public
Offering"). See "The Public Offering."

THE PREFERRED OFFERING

Upon consummation of the Offerings, the Company expects, subject to market
conditions, to sell through AmerUs Capital I (the "Trust"), a statutory business
trust formed under the laws of the State of Delaware and a wholly-owned
subsidiary of the Company, trust preferred securities to the public in an
aggregate amount of approximately $75 million pursuant to a separate prospectus
(the "Preferred Offering"). The Trust would invest the net proceeds of the
Preferred Offering, which are expected to be $72.4 million after giving effect
to the underwriting discount and estimated offering expenses, in deferrable
interest subordinated debentures (the "Junior Subordinated Debt Securities") of
the Company. It is expected that the Company would use the proceeds received in
the Preferred Offering to repay amounts outstanding under the Bank Credit
Facility. See "The Preferred Offering" and "Management's Discussion and Analysis
of Results of Operation and Financial Condition--Liquidity and Capital
Resources."

The consummation of the Offerings is not conditioned upon completion of the
Preferred Offering, and there can be no assurance that the Preferred Offering
will be completed. See "The Preferred Offering."

SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

The summary consolidated financial data below for each of the three years
ending December 31, 1995 are derived from the Consolidated Financial Statements
of the Company, which financial statements have been audited by KPMG Peat
Marwick LLP, independent auditors. The summary consolidated financial data
provided below for each of the nine-month periods ended September 30, 1996 and
1995 and for each of the two years ending December 31, 1992 are derived from the
unaudited consolidated financial statements of the Company. In the opinion of
management, the unaudited financial data for the two years ended December 31,
1992 presents fairly the consolidated financial statements for such periods in
conformity with generally accepted accounting principles.

The foregoing give effect to the Reorganization and the Distribution as if
both had been completed prior to the periods presented, but do not give effect
to the Capital Contribution. In the opinion of management, the financial
information presented for all interim periods reflects all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of such data. Results for the nine-month periods ended September
30, 1996 and 1995 are not necessarily indicative of results that may be expected
for any other interim period or the year as a whole. This data should be read in
conjunction with (i) "Management's Discussion and Analysis of Results of
Operations and Financial Condition," (ii) the audited Consolidated Financial
Statements of the Company as of December 31, 1995 and 1994, and for each of the
years in the three-year period ended December 31, 1995, which financial
statements have been audited by KPMG Peat Marwick LLP, independent auditors,
together with the related notes and the report thereon, (iii) the unaudited
consolidated financial statements of the Company as of September 30, 1996 and
1995 and for each of the nine-month periods ended September 30, 1996 and 1995
and (iv) other financial data included elsewhere in this Prospectus.

12
<PAGE>

<TABLE>
<CAPTION>
AS OF OR FOR THE
NINE MONTHS ENDED AS OF OR FOR THE YEAR ENDED DECEMBER 31,(A)
SEPTEMBER 30,(A)
-------------------- -----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Revenues:
Insurance premiums............................ $ 133.7 $ 183.9 $ 244.1 $ 237.9 $ 226.4 $ 192.9 $ 186.9
Product charges............................... 39.1 42.5 57.3 56.3 57.4 57.2 50.8
Net investment income......................... 189.3 210.5 285.2 275.7 269.9 273.1 268.6
Realized gains (losses) on investments........ 62.5 41.6 51.4 (19.9) 15.5 10.1 15.7
Other income.................................. 2.3 2.3 5.4 2.4 2.4 0.9 3.6
Contribution from the Closed Block............ 2.7 -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total revenues.................................. 429.6 480.8 643.4 552.4 571.6 534.2 525.6
Benefits and expenses:
Total policyowner benefits.................... 222.9 279.7 374.6 369.9 364.3 334.8 327.8
Total expenses................................ 73.8 80.9 108.9 111.4 106.0 100.0 87.6
Dividends to policyowners..................... 26.3 36.3 49.4 45.0 45.5 42.1 40.9
--------- --------- --------- --------- --------- --------- ---------
Total benefits and expenses..................... 323.0 396.9 532.9 526.3 515.8 476.9 456.3
--------- --------- --------- --------- --------- --------- ---------

Income before income taxes...................... 106.6 83.9 110.5 26.1 55.8 57.3 69.3
Income tax expense.............................. 40.4 29.9 41.2 19.4 21.4 18.6 24.5
--------- --------- --------- --------- --------- --------- ---------
Income before cumulative effect of a change in
accounting principles.......................... 66.2 54.0 69.3 6.7 34.4 38.7 44.8
Cumulative effect of a change in accounting
principles, net of tax......................... 0.0 0.0 0.0 0.0 (3.2) 0.0 0.0
--------- --------- --------- --------- --------- --------- ---------
Net income (E).................................. $ 66.2 $ 54.0 $ 69.3 $ 6.7 $ 31.2 $ 38.7 $ 44.8
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Earnings per share (G).......................... $ 3.39 -- $ 3.54 -- -- -- --

CONSOLIDATED BALANCE SHEET DATA:
Total invested assets........................... $ 3,835.5 $ 3,839.7 $ 3,965.0 $ 3,491.7 $ 3,639.3 $ 3,274.8 $ 3,155.8
Total assets.................................... 4,291.8 4,248.8 4,371.9 4,036.9 4,030.7 3,707.6 3,572.5
Total liabilities............................... 3,776.2 3,760.5 3,832.0 3,618.6 3,524.8 3,286.4 3,195.6
Total shareholders' equity (B)(E)............... 515.6 488.3 539.9 418.3 505.9 421.2 376.9

OTHER OPERATING DATA:
Adjusted operating income (C)................... $ 31.3 $ 29.0 $ 38.0 $ 34.4 $ 24.2 $ 32.1 $ 36.3
Adjusted operating income per share (C)......... $ 1.61 -- $ 1.95 -- -- -- --
Adjusted return on average equity (C)........... 7.9% 8.5% 7.9% 7.4% 5.2% 8.0% 10.5%
Pro forma adjusted return on average equity
(F)............................................ 9.6% -- 9.8% -- -- -- --

Individual life insurance in force, net of
reinsurance.................................... $ 26,082 $ 25,865 $ 25,984 $ 25,282 $ 24,698 $ 23,947 $ 23,181
Number of employees............................. 407 406 406 457 489 505 526

STATUTORY DATA:
Statutory premiums and deposits:
Individual life............................... $ 236.0 $ 233.0 $ 307.1 $ 296.4 $ 286.3 $ 270.2 $ 261.7
Annuities (D)................................. 73.4 145.6 197.1 187.8 90.4 65.2 108.5
</TABLE>

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

(A) The merger of Old AML into Central Life, which was consummated in 1994, has
been accounted for as a pooling of interests transaction.

(B) Amounts reported prior to September 30, 1996 reflect policyowners' equity.
From December 31, 1993, results reflect the impact of SFAS 115, "Accounting
for Certain Investments in Debt and Equity Securities." See Note 2 to
Consolidated Financial Statements.

(C) Adjusted data reflects net income adjusted to eliminate certain items which
management believes are not indicative of overall operating trends,
including realized gains and losses, merger-related costs, reorganization
costs, curtailment gain, and SFAS 106 transition obligation, all of which
are net of tax, and mutual life insurance company EQUITY ADD-ON TAX.
Adjusted return on average equity for interim periods is presented on an
annualized basis. Adjusted operating income, adjusted operating income per
share and adjusted return on average equity should not necessarily be
considered better indicators of the Company's overall operating performance
than net income or earnings per share, nor are they better indicators of the
Company's liquidity than cash flows. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition--Adjusted
Operating Income."

13
<PAGE>

(D) Effective May 1996, substantially all new sales of individual deferred
annuities are made through the Ameritas Joint Venture. See
"Business--Ameritas Joint Venture."

(E) The Capital Contribution had the effect of reducing total shareholders'
equity as of September 30, 1996 and the year ended December 31, 1995 by $79
million, and reducing net income for the nine months ended September 30,
1996 and the year ended December 31, 1995 by $0.1 million and $0.3 million,
respectively.

(F) Pro forma adjusted return on average equity is based upon adjusted operating
income further adjusted for the pro forma effects of the Offerings and
Reorganization and investment income on the proceeds from the investment of
the Capital Contribution to AmerUs Life.

(G) Retroactively reflects the issuance of 14.5 million shares of Class A Common
Stock and 5.0 millon shares of Class B Common Stock at the beginning of the
respective periods and gives retroactive effect to the Capital Contribution,
which has the effect of reducing net income by $0.1 million and $0.3 million
for the nine months ended September 30, 1996 and the year ended December 31,
1995, respectively.

14
<PAGE>
RISK FACTORS

POTENTIAL INVESTORS SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" AND OTHER
INFORMATION IN THIS PROSPECTUS PRIOR TO MAKING AN INVESTMENT DECISION REGARDING
THE CLASS A COMMON STOCK.

HOLDING COMPANY STRUCTURE; LIMITATIONS ON DIVIDENDS

The Company is an insurance holding company whose assets consist primarily
of all of the outstanding shares of common stock of AmerUs Life. The Company's
ongoing ability to pay dividends to its shareholders and meet its other
obligations, including operating expenses and any debt, is primarily dependent
upon the receipt of sufficient funds from AmerUs Life in the form of dividends
or loans. The payment of dividends by AmerUs Life to the Company is regulated
under Iowa law. Under Iowa law, AmerUs Life may pay dividends only from the
earned surplus arising from its business and must receive the prior approval of
the Iowa Commissioner to pay a dividend if such dividend would exceed certain
statutory limitations. The current statutory limitation is the greater of (i)
10% of AmerUs Life's capital and statutory surplus as of the preceding year end
or (ii) the net gain from operations for the previous calendar year. Iowa law
gives the Iowa Commissioner broad discretion to disapprove requests for
dividends in excess of these limits. Based on this limitation and 1995 statutory
results, and absent the Distribution, AmerUs Life would have been able to pay
approximately $40 million in dividends to the Company in 1996 without obtaining
the Iowa Commissioner's approval. However, as a result of the Distribution,
AmerUs Life will not be able to pay any additional dividends in the 12-month
period following the Distribution without the prior approval of the Iowa
Commissioner. AmerUs Life has the ability to loan funds to the Company subject
to certain regulatory restrictions. At September 30, 1996, AmerUs Life could
loan up to $120 million without prior regulatory approval. AmerUs Life's
inability to pay dividends or advance loans to the Company in the future in an
amount sufficient for the Company to pay dividends to its shareholders and meet
its other obligations could have a material adverse effect on the Company and
the market value of the Class A Common Stock. See "Dividend Policy,"
"Supervision and Regulation" and "Description of the Capital Stock--Common
Stock."

Under the Bank Credit Facility, the Company is prohibited from paying
dividends on its Common Stock in excess of an amount equal to 4% of the
Company's consolidated net worth as of the last day of the preceeding fiscal
year.

In connection with the Preferred Offering, the Company will agree not to
declare or pay any dividends on the Company's capital stock (including the Class
A Common Stock) during any period of time in which dividends on the preferred
securities issued in connection with the Preferred Offering are suspended,
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 dividends on the
preferred securities have been paid. See "The Preferred Offering."

CONTROL BY AMHC; ANTI-TAKEOVER EFFECTS OF IOWA LAW AND THE COMPANY'S ARTICLES OF
INCORPORATION AND BYLAWS

AMHC indirectly owns 100% of the Class B Common Stock of the Company and,
following completion of the Offerings, will indirectly hold 77% of the combined
voting power of the Class A Common Stock and Class B Common Stock (assuming that
the underwriters in the Public Offering do not exercise their over-allotment
option). Moreover, under Iowa law, AMHC is required to own, directly or
indirectly through one or more intermediate holding companies, shares of capital
stock of the Company which carry the right to cast a majority of the votes
entitled to be cast by all of the outstanding shares of the capital stock at a
shareholders' meeting of the Company. Consequently, AMHC may, without the
approval of the other shareholders of the Company, prevent a potential takeover
or merger proposal (even if advantageous to the other shareholders). In
addition, AMHC may, without the approval of the other shareholders of the
Company, elect all of the directors of the Company, approve matters submitted
for shareholder approval and effect a possible transaction to go private. In the
event that AMHC adopts a plan of conversion to stock company form and
demutualizes pursuant to Iowa law, each share of Class B Common Stock would
automatically be converted to become a share of Class A Common Stock. See
"Description of the Capital Stock--Common Stock" and "Supervision and
Regulation--Regulation of the Company and AMHC."

15
<PAGE>
In addition to the requirement under Iowa law that AMHC directly or
indirectly own shares of capital stock of the Company giving it a majority of
the votes entitled to be cast by all of the outstanding shares of capital stock,
certain provisions included in the Company's Articles of Incorporation and its
Bylaws (the "Bylaws") may also have anti-takeover effects and may delay, defer
or prevent a takeover attempt that a shareholder might consider in his or her
best interests. These provisions include provisions relating to the Class B
Common Stock, so-called "blank check" preferred stock and a classified board of
directors. Such provisions may adversely affect the prevailing market price of
the Class A Common Stock. See "Certain Provisions of the Articles of
Incorporation and Bylaws of the Company" for a description of these provisions.

RELATIONSHIP WITH AMHC; POTENTIAL CONFLICTS OF INTEREST

AMHC is a mutual insurance holding company which is operated for the benefit
of its members. The members of AMHC are policyowners of AmerUs Life. AMHC
(through certain of its wholly-owned subsidiaries) has entered or will enter
into agreements with the Company and/or AmerUs Life whereby the Company and/or
AmerUs Life will provide to such subsidiaries certain management, data
processing, legal and other services, or whereby such subsidiaries will provide
services to the Company and/or AmerUs Life. Although management believes the
terms of such agreements are fair and reasonable, none of these contracts were
the result of arms' length negotiations between independent parties. These
agreements may be modified in the future and additional agreements or
transactions may be entered into between AMHC or subsidiaries of AMHC and the
Company and its subsidiaries. See "Certain Transactions and Relationships."

As a result of these arrangements, there may be a number of potential
conflicts of interest between the Company and AMHC. In an effort to address such
potential conflicts, and consistent with proposed regulations recently
promulgated by the Iowa Commissioner, at least three of the Company's outside
directors will not be directors of AMHC or any of AMHC's subsidiaries. Following
the completion of the Offerings, it is the Company's intent that at least two of
the Company's outside directors will have had no previous affiliation with the
Company. Outside directors of the Company will review any intercompany
transactions involving potential conflicting interests. However, there can be no
assurance that decisions made by AMHC will not adversely affect the Company. See
"Certain Transactions and Relationships" and "Management--Board of Directors of
the Company."

COMPETITIVE ENVIRONMENT

The Company competes with a large number of other insurers and non-insurance
financial service companies, such as banks, broker-dealers and mutual funds,
many of whom have greater financial resources, offer alternative products and,
with respect to other insurers, have higher claims-paying ability and financial
strength ratings than the Company. Competition exists for individual consumers
and agents and other distributors of life insurance and annuity products.
National banks, with their pre-existing customer bases for financial services
products, may pose increasing competition in the future to insurers who sell
life insurance and annuity products, including the Company. Recent United States
Supreme Court decisions have expanded the authority of national banks to sell
life insurance products and annuities.

Several proposals to repeal or modify the Glass-Steagall Act of 1933, as
amended, and the Bank Holding Company Act of 1956, as amended, have been made by
members of Congress and the Clinton administration. Currently, the Bank Holding
Company Act restricts banks from being affiliated with insurance companies.
Certain of the proposals would repeal or modify these restrictions and permit
banks to become affiliated with insurance companies. None of these proposals has
yet been enacted, and it is not possible to predict whether any of these
proposals will be enacted or, if enacted, their potential effect on the Company.

The Company must attract and retain productive agents to sell its life
insurance and annuity products. Strong competition exists among insurance
companies for agents with demonstrated ability. Competition among insurance
companies for such agents is based on, among other things, the services provided
to, and relationships developed with, these agents in addition to compensation
and product structure.

16
<PAGE>
IMPORTANCE OF RATINGS

Ratings with respect to claims-paying ability and financial strength have
become an increasingly important factor in establishing the competitive position
of insurance companies. Each of the rating agencies reviews its ratings
periodically and there can be no assurance that current ratings will be
maintained in the future. Claims-paying and financial strength ratings are based
upon factors relevant to policyowners and are not directed toward protection of
shareholders. AmerUs Life's claims-paying ability is currently rated "AA-" (Very
high) by Duff & Phelps and "A" (Good) by Standard & Poor's. AmerUs Life is rated
"A" (Excellent) by A.M. Best and "A2" (Good) by Moody's. A downgrade in such
ratings could significantly affect sales of life insurance and annuity products
and could have a material adverse effect on the results of operations of the
Company. See "Management's Discussion and Analysis of Results of Operations and
Financial Condition."

INTEREST RATE FLUCTUATIONS; RISK OF IMPACT OF FORCED LIQUIDATION OF INVESTMENT
PORTFOLIO

Severe interest rate fluctuations could adversely affect AmerUs Life's
ability to pay policyowner benefits with operating and investment cash flows,
cash on hand and other cash sources. In the unanticipated event that such
sources would prove inadequate, management believes the Company could meet
shortfalls with funds available to the Company as a result of its membership in
the Federal Home Loan Bank of Des Moines, as well as other borrowing sources.
See "Management's Discussion and Analysis of Results of Operations and Financial
Condition--Liquidity and Capital Resources."

Interest rate fluctuations may also have an impact on policyowner behavior.
To the extent that the Company does not maintain competitive interest rates with
those credited in the marketplace, increased policyowner lapses may be
experienced. While such lapses would generate surrender charges during the
current period, they would reduce the Company's future income.

The Company's actual cash flows from investments may differ from those
anticipated at the time of investment. Some of the Company's corporate bonds
have call features which could cause the Company to reinvest these proceeds at
lower interest rates if such bonds were called prior to their stated maturities.
As of September 30, 1996, approximately $319 million, or 16.0% of the bond
portfolio (excluding mortgage and other asset-backed securities), was subject to
call. The Company's collateralized mortgage obligations ("CMOs") and other
asset-backed securities are purchased based on assumptions regarding rates of
prepayments. To the extent that actual prepayments are earlier or later than
anticipated at the time of purchase, the Company may not receive cash flows when
expected or needed. These prepayment rates are influenced by interest rates
available for new mortgages as well as general economic conditions.

FUTURE POLICY BENEFITS EXPOSURE

The liability established by the Company for future life insurance and
annuity policy benefits is based upon assumptions concerning a number of
factors, including future interest rates, mortality, persistency and expenses.
Actual experience will likely differ from assumed experience. Should the
Company's provision for future policy benefits prove inadequate, future earnings
will be adversely affected.

REGULATORY AND RELATED RISKS

AmerUs Life is subject to regulation by state regulators under the insurance
laws of states in which it conducts business. The Company, AmerUs Life and AMHC
are also subject to regulation by the Insurance Division of the Iowa Department
of Commerce. The purpose of such regulation is primarily to provide safeguards
for policyowners rather than to protect the interests of shareholders. The
insurance laws of the various states establish regulatory agencies with broad
administrative powers including, among others, the authority to grant or revoke
operating licenses and to regulate sales practices, investments, deposits of
securities, the form and content of financial statements and insurance policies,
accounting practices and the maintenance of specified RESERVES and capital. See
"Supervision and Regulation."

The insurance regulatory framework has been subject to increasing scrutiny
by the National Association of Insurance Commissioners ("NAIC"), state
legislatures, regulators and Congress. The NAIC and

17
<PAGE>

state regulators have from time to time re-examined laws and regulations, with
an emphasis on insurance company investment and solvency issues. State
legislatures have considered or enacted legislative proposals that alter, and in
many cases increase, state regulation of insurance companies. In recent years,
various legislative proposals have been introduced in Congress that called for
the federal government to assume some role in the regulation of the insurance
industry. To date, none of the Congressional proposals had been enacted and it
cannot be predicted what form any such future proposals might take or what
effect, if any, such proposals might have on AmerUs Life if enacted into law.

Insurance regulators have also given greater emphasis in recent years to the
investigation of allegations of improper sales practices by insurance agents,
including churning and misleading sales presentations. The NAIC has adopted a
model law and regulation which would standardize the form and content of any
illustrations provided to prospective purchasers of individual life insurance
products. The model law has been enacted, to be effective January 1, 1997, in at
least two states, and is currently under consideration in a number of other
states. Management expects that similar legislation will eventually be enacted
in additional states in which AmerUs Life sells individual life insurance
products. There can be no assurance as to whether this reform will have a
material adverse impact on sales of such products by the industry as a whole or
by AmerUs Life.

State guaranty associations assess insurance companies to pay contractual
benefits owed by impaired, insolvent or failed insurance companies. AmerUs Life
was assessed, net of amounts estimated to be recoverable from future state
PREMIUM taxes, approximately $0.4 million during the nine months ended September
30, 1996 and $0.4 million, $1.2 million and $3.3 million for the years ended
December 31, 1995, 1994, and 1993, respectively. AmerUs Life cannot predict the
amount of any future assessments. See "Supervision and Regulation."

In addition, the Iowa Commissioner has proposed rules that would regulate
the issuance of stock by the Company in the Offerings and in subsequent
offerings. See "Supervision and Regulation--Regulation of the Company and AMHC."

RISKS OF CLASS ACTION LITIGATION

In recent years, life insurance companies, including AmerUs Life, have been
named defendants in class action lawsuits relating to life insurance pricing and
sales practices. While the litigation is being vigorously defended and AmerUs
Life denies the allegations, there can be no assurance that this or future
litigation will not have a material adverse effect on the life insurance
industry generally or on the Company. "See Business--Legal Proceedings."

POTENTIAL ADVERSE TAX LEGISLATION

Congress has from time to time considered possible legislation that would
reduce or eliminate the benefits to policyowners of the deferral of taxation on
the accretion of value within certain annuities and life insurance products or
otherwise affect the taxation of annuities and life insurance products and
insurance companies. Other possible legislation, including a simplified "flat
tax" income tax structure with an exemption from taxation for investment income,
could also adversely affect purchases of annuities and life insurance products
if such legislation were to be enacted. There can be no assurance as to what, if
any, future legislation might be enacted or, if enacted, whether any such
legislation would contain provisions with possible adverse effects on the
Company's life insurance and annuity products.

RISKS RELATING TO THE CLOSED BLOCK

Under the Plan, AmerUs Life established and will operate a CLOSED BLOCK for
the benefit of the CLOSED BLOCK BUSINESS. The Closed Block is based on a concept
included in demutualization plans of other mutual life insurance companies and
is designed to give reasonable assurance to policyowners included therein that,
after the Reorganization, assets will be available to maintain DIVIDEND SCALES
and interest credits in effect prior to the Reorganization if the experience
underlying such scales and credits continues. In accordance with the Plan,
certain of AmerUs Life's invested assets, as well as cash and short-term
investments, were allocated by AmerUs Life to the Closed Block as of June 30,
1996. Non-investment grade bonds, mortgage loans, preferred stock, real estate
and certain other invested assets were not included in this allocation to the
Closed Block. The amount of assets allocated to the Closed Block is expected to
produce cash flows which, together with future revenues from the Closed Block

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Business, are expected to be sufficient to support the Closed Block Business,
including provisions for payment of claims, taxes and certain other expenses and
for the continuation of policyowner dividend scales and interest credits in
effect prior to the Reorganization, if the experience underlying such dividend
scales continues. The assets, including the revenue therefrom, allocated to the
Closed Block Business will accrue solely to the benefit of owners of the
policies included in the Closed Block Business until such time as the Closed
Block is no longer in effect; accordingly, such assets and the revenue therefrom
will not be available for the benefit of AmerUs Life or the Company.

To the extent that over time cash flows from the assets allocated to the
Closed Block and other experience relating to the Closed Block are, in the
aggregate, more or less favorable than assumed in establishing the Closed Block,
total dividends paid to Closed Block policyowners in the future would be greater
than or less than the total dividends that would have been paid to these
policyowners if the dividend scales in effect prior to the Reorganization had
been continued. Any excess of cumulative favorable deviations for Closed Block
policies over unfavorable deviations will be available for distribution over
time to Closed Block policyowners and will not be available to AmerUs Life or
the Company. Unless the Iowa Commissioner consents to an earlier termination,
the Closed Block will continue to be in effect until the date on which none of
the policies in the Closed Block remains in force.

The Company will continue to pay guaranteed benefits under all policies,
including the policies included in the Closed Block in accordance with their
terms. If the assets allocated to the Closed Block, the investment cash flows
from those assets and the revenues from the policies included in the Closed
Block including investment income thereon prove to be insufficient to pay the
benefits guaranteed under the policies included in the Closed Block, the Company
will be required to make such payments from its general funds. The Company bears
the costs of operating and managing the Closed Block and, accordingly, such
costs were not funded as part of the assets allocated to the Closed Block. Any
increase in such costs in the future would be borne by the Company. See "The
Reorganization and Distribution of the Non-life Insurance
Subsidiaries--Establishment and Operation of the Closed Block."

EFFECT OF PARTIAL SUBSCRIPTION FOR SHARES; CANCELLATION OR RESCISSION OF THE
SUBSCRIPTION OFFERING

A partial subscription and the failure to effect the Public Offering might
have an adverse effect on the market for the Class A Common Stock, the ability
of the purchasers of Shares in the Subscription Offering to resell such Shares,
and the ability of the Company to raise additional capital in the equity markets
in the future. In addition, the Company may cancel or rescind the Subscription
Offering in its sole discretion at any time prior to the closing of the
Offerings; accordingly there can be no assurance that Subscription Policyowners
who subscribe for Shares will be able to purchase such Shares. See "The
Subscription Offering."

CLASS A COMMON STOCK ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Class A Common Stock (including shares of
Class B Common Stock converted into Class A Common Stock), or the perception
that such sales could occur, could have an adverse effect on the price of the
Class A Common Stock. The Company believes that none of the shares of Class A
Common Stock or Class B Common Stock which are held by AmerUs Group will be
eligible for sale under Rule 144 promulgated under the Act for two years.
Thereafter, such shares will be subject to the volume and timing requirements of
Rule 144. However, the Company and AmerUs Group are parties to an agreement
which provides AmerUs Group with certain registration rights with respect to
such shares. See "Certain Transactions and Relationships--Intercompany
Agreement" and "Shares Eligible for Future Sale."

NO PRIOR MARKET FOR COMMON STOCK; POSSIBLE VOLATILITY OF COMMON STOCK PRICE

Prior to the Offerings there has been no public market for shares of either
class of the Company's Common Stock. Application has been made for quotation of
the Class A Common Stock on the Nasdaq National Market. There can be no
assurance, however, that an active trading market for the Class A Common Stock
will develop, or, if developed, will continue. The Subscription Price has been
established by the Company and the Selling Shareholder after consultation with
their financial advisors and based upon a review of the recent prices of stocks
of comparable publicly-traded companies. See "The

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Subscription Offering." The Public Offering Price for the Class A Common Stock
will be determined by negotiations between the Company, the Selling Shareholder
and the representatives of the underwriters for the Public Offering. Among the
factors to be considered in determining the Public Offering Price of the Class A
Common Stock, in addition to prevailing market conditions, will be the Company's
historical performance, estimates of the business potential and earnings
prospects of the Company, an assessment of the Company's management and the
consideration of these factors in relation to market valuations of companies in
related businesses. The price at which the Class A Common Stock is sold in the
Offerings may not be indicative of the market price of the Class A Common Stock
after completion of the Offerings. In addition, factors such as variations in
the Company's financial results or other developments affecting the Company
could cause the market price of the Class A Common Stock to fluctuate
significantly after the Offerings.

THE COMPANY

AmerUs Life Holdings, Inc. is an Iowa business corporation which was formed
in August of 1996 primarily for the purpose of owning all of the stock of AmerUs
Life following the Reorganization. See "The Reorganization and Distribution of
the Non-Life Insurance Subsidiaries." AmerUs Life, the Company's principal asset
and wholly-owned subsidiary, is an Iowa stock life insurance company.

AmerUs Life was originally incorporated in 1896 as a mutual insurance
company under the name Central Life Assurance Society of the United States. In
1994, Old AML merged into Central Life and the resulting entity changed its name
to American Mutual Life. On June 30, 1996, pursuant to the Plan, American Mutual
Life formed AMHC as a mutual insurance holding company and American Mutual Life
was converted into a stock life insurance company and its name was changed to
AmerUs Life Insurance Company.

The Company offers a broad line of individual life insurance and annuity
products through a nationwide distribution system. It presently conducts
business in 45 states and the District of Columbia. As of September 30, 1996,
the Company had approximately 418,000 life insurance policies and annuity
contracts outstanding and individual life insurance in force, net of
reinsurance, of approximately $26.1 billion. As of September 30, 1996, the
Company had total assets of $4.3 billion and total shareholders' equity of $437
million (prior to the Offerings, after giving effect to the Capital
Contribution).

The Company's executive offices are located at 418 Sixth Avenue, Des Moines,
Iowa 50306-2499, and its telephone number is (515) 280-1331.

THE REORGANIZATION AND DISTRIBUTION OF THE
NON-LIFE INSURANCE SUBSIDIARIES

DESCRIPTION OF THE REORGANIZATION

On October 27, 1995, the Board of Directors of American Mutual Life adopted
the Plan, which authorized American Mutual Life to effect the Reorganization.
Pursuant to the Reorganization, American Mutual Life formed AMHC as a mutual
insurance holding company and American Mutual Life was converted into a stock
life insurance company and its name was changed to AmerUs Life Insurance
Company. The Iowa Commissioner held a public hearing on the Reorganization on
November 21, 1995. The Plan was approved by American Mutual Life's policyowners
on November 28, 1995. The Iowa Commissioner approved the Plan on December 13,
1995, and the Plan became effective on June 30, 1996 (the "Effective Date").

As part of the Reorganization, all of the shares of capital stock of AmerUs
Life were issued to AMHC. Subsequent to the Reorganization, on August 1, 1996,
AMHC contributed all of its shares of capital stock of AmerUs Life to AmerUs
Group. The Company was formed on August 1, 1996, as of which date all of its
shares of capital stock were issued to AmerUs Group. Immediately after the
Distribution, AmerUs Group contributed all of its shares of common stock in
AmerUs Life to the Company. Under this structure, the Company is an intermediate
holding company, with AmerUs Group as its direct parent company and

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AmerUs Life as its wholly-owned subsidiary. Under Iowa law, AMHC is required to
retain direct or indirect ownership and control of shares representing a
majority of the vote of the outstanding capital stock of the Company.

Immediately following the Reorganization, the policyowners' contract rights
in their life insurance policies and annuities remained with AmerUs Life and the
policyowners automatically became members of AMHC, and thereby became entitled
to vote for directors of AMHC and on certain other matters as set forth in
AMHC's articles of incorporation. Purchasers of life insurance policies and
annuities from AmerUs Life after the Reorganization automatically become members
of AMHC (subject to certain exceptions and conditions set forth in the Plan).

American Mutual Life was the first company to obtain approval under the Iowa
mutual holding company statute to form a mutual insurance holding company. The
Company understands that at least six other states, including California,
Minnesota, Missouri, Pennsylvania, Rhode Island and Vermont, and the District of
Columbia, have recently adopted laws authorizing the formation of mutual
insurance holding companies.

DISTRIBUTION OF THE NON-LIFE INSURANCE SUBSIDIARIES AND RELATED TRANSACTIONS

Prior to the Distribution, AmerUs Life made the Capital Contribution to or
for the benefit of certain of the Non-Life Insurance Subsidiaries. The net
assets contributed in the Capital Contribution had an aggregate carrying value
of approximately $79 million as of the date of contribution. Following the
Capital Contribution, a series of transactions were undertaken by the Company
and its affiliates. AmerUs Life effected the Distribution, pursuant to which it
distributed the Non-Life Insurance Subsidiaries to AmerUs Group. Immediately
following the Distribution, the Company borrowed $100 million in term debt and
$75 million under a revolving line of credit pursuant to the Bank Credit
Facility. The Company used the proceeds from such borrowings to make a $125
million capital contribution to AmerUs Life and to purchase a $50 million
surplus note from AmerUs Life. The Consolidated Financial Statements and other
financial information presented herein give effect to the Reorganization and the
Distribution as if both had been completed prior to the periods presented
(including giving effect to the establishment of the Closed Block from June 30,
1996 forward), but do not give effect to the Capital Contribution.

BACKGROUND AND REASONS FOR THE REORGANIZATION AND DISTRIBUTION

Recognizing the capital-raising difficulties faced by mutual insurers and
the present competitive state of the insurance industry, the Iowa legislature in
1995 amended Iowa's insurance law to permit mutual insurance companies
incorporated in Iowa to reorganize into a mutual insurance holding company
structure.

As a mutual life insurance company, American Mutual Life had no ability to
issue shares of capital stock and consequently had no access to market sources
of equity capital and limited ability to increase its surplus and fund future
growth while maintaining the financial strength necessary to assure policyowners
that their obligations will be met. The Reorganization will position the Company
to obtain access to equity capital through the Offerings and will enable the
Company to effect future equity offerings as necessary and appropriate to
satisfy its capital requirements.

The Reorganization is also intended to facilitate potential mergers,
acquisitions and strategic alliances by creating a more flexible corporate
structure. Among other things, the Reorganization will facilitate the issuance
of stock by the Company to consummate acquisitions.

The Iowa legislation would permit AMHC subsequently to demutualize, a
process which would cause AMHC to convert from mutual to stock form and become
publicly owned by shareholders. Pursuant to the Company's Articles of
Incorporation, upon a demutualization all of the Company's shares of outstanding
Class B Common Stock will automatically convert into shares of Class A Common
Stock. See "Description of the Capital Stock." AMHC has no present plans to
demutualize.

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The Capital Contribution and the Distribution were important preliminary
transactions that were necessary to complete the Offerings and the Preferred
Offering successfully.

REGULATION OF AMHC AFTER THE REORGANIZATION

AMHC, as a mutual insurance holding company incorporated in Iowa, is subject
to regulation at a level substantially equal to that of an Iowa domestic
insurance company. The Iowa Commissioner retains jurisdiction at all times over
a mutual insurance holding company and any intermediate insurance holding
company to assure that policyowners' interests are protected. See "Supervision
and Regulation."

Under Iowa law, shares of capital stock of AmerUs Life which carry the right
to cast a majority of the votes entitled to be cast by all of the outstanding
shares of the capital stock (which are required at all times to be owned,
directly or indirectly, by AMHC) may not be conveyed, transferred, assigned,
pledged, subjected to a security interest or lien, encumbered, or otherwise
hypothecated or alienated by AMHC or any intermediate holding company, including
the Company. Any conveyance, transfer, assignment, pledge, security interest,
lien, encumbrance, hypothecation or alienation by AMHC or any intermediate
holding company, in or on such shares of AmerUs Life having a voting majority
shall be deemed void in inverse chronological order from the date of such
transaction to the extent necessary to give AMHC unencumbered direct or indirect
ownership of such shares having a voting majority.

ESTABLISHMENT AND OPERATION OF THE CLOSED BLOCK

In connection with the Reorganization, the Closed Block was established.
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 policyowners included therein that, after the
Reorganization, assets will 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 establishment of the Closed
Block did not alter, diminish, reduce or in any other way adversely affect these
policyowners' contractual rights.

The Closed Block was established on June 30, 1996. Pursuant to the Plan,
assets were allocated to the Closed Block at June 30, 1996 in an amount which
the Company expects to produce cash flows which, together with anticipated
revenues from the Closed Block Business, are expected to be sufficient to
support the Closed Block Business, including provision for payment of claims,
taxes and certain other expenses and for the continuation of dividend scales and
interest credits in effect prior to the Reorganization if the experience
underlying such scales and credits continues or for appropriate adjustments in
such scales and credits if the experience changes. The assets, including the
revenue therefrom, allocated to the Closed Block will accrue solely to the
benefit of policyowners included in the Closed Block Business until such time as
the Closed Block is no longer in effect. To the extent that over time cash flows
from the assets allocated to the Closed Block and other experience relating to
the Closed Block are, in the aggregate, more or less favorable than assumed in
establishing the Closed Block, total dividends and interest credits paid to
Closed Block policyowners in the future may be greater than or less than the
total dividends and interest credits that would have been paid to these
policyowners if the dividend scales and interest credits in effect prior to the
Reorganization had been continued. Dividends and interest credits on policies
included in the Closed Block, as in the past, will be declared at the discretion
of AmerUs Life's Board of Directors and may vary from time to time (reflecting
changes in investment, mortality, persistency and other experience factors).
AmerUs Life will not be required to support the payment of dividends and
interest credits on Closed Block policies from its general funds above certain
guaranteed levels, although it could choose to provide such support if it were
deemed to be in the best interests of AmerUs Life's shareholders.

AmerUs Life will continue to pay guaranteed benefits under all policies,
including the policies included in the Closed Block, in accordance with their
terms. If the assets allocated to the Closed Block, the investment cash flows
from those assets and the revenues from the policies included in the Closed
Block including investment income thereon prove to be insufficient to pay the
benefits guaranteed under the policies included in the Closed Block, AmerUs Life
will be required to make such payments from its

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<PAGE>
general funds. AmerUs Life bears the costs of operating and managing the Closed
Block and, accordingly, such costs were not funded as part of the assets
allocated to the Closed Block. Any increase in such costs in the future would be
borne by AmerUs Life. Since the Closed Block has been funded to provide for
payment of guaranteed benefits as well as future dividends, it should not be
necessary to use other general funds to pay guaranteed benefits unless the
Closed Block Business experiences substantial adverse deviations in investment,
mortality, persistency or other experience factors. While AmerUs Life will use
its best efforts to support the policies included in the Closed Block with the
assets allocated to the Closed Block, these assets will be subject to the same
liabilities (with the same priority in liquidation) as assets outside the Closed
Block.

The Closed Block Business will consist of the policies within the classes
specified in the Plan, but only to the extent such policies were in force on
June 30, 1996. A policy may be within a class for which there is a dividend
scale currently in effect, even if it does not receive a current dividend, and,
therefore, the policy would be included in the Closed Block.

Premiums received and policy benefits paid by AmerUs Life on the policies
included in the Closed Block and investment cash flows from the assets allocated
to the Closed Block and from the investment of net cash flow will be added to or
withdrawn from the Closed Block as provided in the Plan. The Closed Block will
be allocated its share of state, local and federal taxes paid on the Closed
Block Business in accordance with tax sharing procedures set forth in the Plan.
However, commissions and other expenses (including investment management
expenses) of operating and administering the Closed Block will not be charged to
the Closed Block except to the limited extent provided in the Plan. If expenses
of operating and administering the Closed Block were to increase after June 30,
1996, such increases would be paid by AmerUs Life. Future estimated cash
outflows were considered in determining the amount of assets allocated to the
Closed Block.

Dividends and interest credits on the Closed Block policies will be set
periodically by AmerUs Life's Board of Directors in accordance with applicable
law and with the objective that all of the assets will be distributed to owners
of Closed Block policies. Such dividends and interest credits will also be
allocated among the policies included in the Closed Block so as to reflect the
underlying experience of the Closed Block and the degree to which the various
classes of Closed Block policies contributed to such experience. An income
statement, balance sheet and schedule of investments for the Closed Block will
be prepared and submitted to the Iowa Commissioner and AmerUs Life's Board of
Directors annually. AmerUs Life will retain an independent consulting actuary to
review the operation of the Closed Block and dividend and interest credit
determinations and to report his or her findings to the Iowa Commissioner and
AmerUs Life's Board of Directors at least every three years, with the first
review to be made as of December 31, 1998.

The Closed Block will continue in effect until either (i) the last policy in
the Closed Block is no longer in force or (ii) the Closed Block is dissolved.
The Plan provides that the Closed Block may not be dissolved without the
approval of the Iowa Commissioner, which approval could only be obtained if
dissolution were demonstrated not to be adverse to the interests of the
policyowners whose policies make up the Closed Block. If the Closed Block is
dissolved, the assets associated with the Closed Block will become part of
AmerUs Life's general funds. If the Closed Block is not dissolved, the expected
life of the Closed Block is in excess of 75 years.

CLOSED BLOCK ASSETS AND LIABILITIES

In accordance with the Plan, certain of AmerUs Life's invested assets, as
well as cash and short-term investments, were allocated to the Closed Block at
June 30, 1996. Non-investment grade bonds, commercial mortgage loans, common and
preferred stock and real estate owned were not included in this allocation to
the Closed Block.

The bonds allocated to the Closed Block include assets of similar asset type
and maturity that were part of the investment segment for AmerUs Life's
TRADITIONAL LIFE INSURANCE policies. In addition, AmerUs Life included in the
Closed Block cash and short-term investments in order to meet the short-term
liquidity requirements of the Closed Block. For GAAP purposes, Closed Block
assets include deferred acquisition costs relating to policies in the Closed
Block.

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<PAGE>
The composition of assets in the Closed Block will change over time as a
result of new investments, prepayments, calls, maturities and sales. New
investments for the Closed Block acquired with Closed Block cash flows shall be
allocated to the Closed Block upon acquisition and shall consist only of
investments permitted by the investment policy for the Closed Block. In the
event of liquidation, the assets allocated to the Closed Block will be subject
to the same liabilities (with the same priority) as assets outside the Closed
Block.

The Company retained Tillinghast, a Towers Perrin Company ("Tillinghast"),
an actuarial consulting firm, to advise it in connection with actuarial matters
involved in the establishment and operation of the Closed Block. The opinion of
Tillinghast, dated October 26, 1995, states (n reliance upon the matters and
subject to the limitations described in such opinion) that the establishment and
operation of the Closed Block as contemplated by the Plan make adequate
provision for allocating to the Closed Block assets which will be reasonably
sufficient to enable the Closed Block to provide for the guaranteed benefits,
taxes and certain other expenses associated with Closed Block policies, and to
provide for the continuation of the current dividend scales and interest credits
in effect prior to the Reorganization if the experience underlying those scales
and credits continues. The Closed Block was funded on a preliminary basis at
June 30, 1996. At September 30, 1996, the Closed Block had assets of $1,237.1
million and liabilities of $1,501.3 million. Final funding adjustments of the
Closed Block will be made, if necessary, prior to the completion of the
Offerings.

The excess of Closed Block Liabilities over Closed Block Assets represents
the expected future after-tax contributions (before certain other expense
charges, which were not funded in the Closed Block) from the Closed Block which
may be recognized in income over the period the policies in the Closed Block
remain in force.

If the actual contribution from the Closed Block in any given period equals
or exceeds the expected contribution for such period as determined at the
establishment of the Closed Block, only the expected contribution would be
recognized in income from continuing operations for that period. Any excess of
the actual contribution over the expected contribution would also be recognized
in income from continuing operations to the extent that the aggregate expected
contribution for all prior periods exceeded the aggregate actual contribution.
Any remaining excess of actual contribution over expected contributions would be
accrued in the Closed Block as a liability for future policyowners' dividends.
This accrual for future dividends effectively limits the actual Closed Block
contribution recognized in income from continuing operations to the Closed Block
contribution expected to emerge from operation of the Closed Block as determined
as of the date of establishment of the Closed Block.

If the actual contribution from the Closed Block in any given period is less
than the expected contribution for that period, because changes in dividends
scales are inadequate to offset the negative performance in relation to the
expected performance, the contribution inuring to shareholders of AmerUs Life
will be reduced. If a liability for policyowners' dividends had been previously
established in the Closed Block because the actual contribution to the relevant
date had exceeded the expected contribution to such date, such liability would
be reduced (but not below zero) in any periods in which the actual contribution
for that period is less than the expected contribution for such period.

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<PAGE>
THE SUBSCRIPTION OFFERING

Pursuant to the Plan, five million Shares are being offered in the
Subscription Offering to Subscription Policyowners as of June 30, 1996 (the
effective date of the Reorganization). If the number of Shares subscribed for in
the Subscription Offering exceeds five million, the Company and the Selling
Shareholder will (i) pro-rate Shares among subscribers so as to permit each
subscriber to purchase, to the extent possible, 100 shares and thereafter pro
rata in the same proportion that the subscription of each bears to the total
subscriptions received by the Company and the Selling Shareholder in the
Subscription Offering and (ii) issue a refund to Subscription Policyowners in
the form of a check for each Share subscribed for but not received. No
policyowner will have a preemptive right to purchase any shares of Class A
Common Stock not subscribed for in the Subscription Offering which are issued in
connection with the Public Offering. The Company and the Selling Shareholder
intend to close the Subscription Offering contemporaneously with the closing of
the Public Offering. If the Public Offering is not completed, the Subscription
Offering will close as soon as practicable after Tuesday, December 3, 1996 (the
"Subscription Expiration Date"), but in no event more than 90 days after the
Subscription Expiration Date, unless cancelled by the Company. See
"--Cancellation of the Subscription Offering."

The issuance of Shares in the Subscription Offering is contingent upon the
sale by the Company and the Selling Shareholder of Shares in the Offerings in an
aggregate amount of at least $50 million.

The Company will not be required to offer Shares in the Subscription
Offering to any Subscription Policyowner who resides in a foreign country. The
Subscription Offering expires at 4:00 P.M., New York time, on the Subscription
Expiration Date.

SUBSCRIPTION PRICE AND PAYMENT FOR SHARES

The Subscription Price is $ per share. Each Subscription Policyowner shall
have the right to subscribe in the Subscription Offering for a minimum of 100
Shares and a maximum of 5,000 Shares. The Subscription Price was set by the
Company and the Selling Shareholder after consultation with their financial
advisors. If the Public Offering Price is less than the Subscription Price, then
the Company and the Selling Shareholder will issue refunds to subscribing
policyowners in the form of a check equal to the amount of such difference
multiplied by the number of Shares subscribed for by each such policyowner. Such
refunds will be mailed to subscribers within 60 days after the closing of the
Public Offering. Offerees in the Subscription Offering who do not subscribe for
shares or who subscribe for less than 5,000 shares will not have an opportunity
to re-subscribe if the Public Offering Price is less than the Subscription
Price. If the Public Offering Price is more than the Subscription Price, the
Subscription Policyowners who purchase Shares in the Subscription Offering will
not be required to pay any additional amounts for the Shares nor will there be
any adjustment in the number of Shares issued to them. As a result, the Public
Offering Price may be greater than the effective price per Share of Class A
Common Stock issued in the Subscription Offering. The Public Offering Price will
be determined by negotiations between the representatives of the underwriters
for the Public Offering, the Company and the Selling Shareholder.

While it is currently the intention of the Company and the Selling
Shareholder to offer all or a portion of the Shares not subscribed for in the
Subscription Offering to the public in the Public Offering, the Company and the
Selling Shareholder may close the Subscription Offering without commencing or
closing the Public Offering in the event the Company and the Selling Shareholder
receive, in the aggregate, $50 million or more in gross proceeds in the
Subscription Offering. In the event that the Company and the Selling Shareholder
determine that the closing of the Subscription Offering shall occur prior to the
closing of the Public Offering and provided that the Company and the Selling
Shareholder elect to proceed with the Subscription Offering, then a bona fide
determination will be made by the Company and the Selling Shareholder after
consultation with their financial advisors and a review of market conditions,
the recent prices of stocks of comparable companies which are publicly traded
and other factors customarily considered in determining an initial public
offering price. The price per share at which the Class A Common Stock would
trade in the public market on the closing of the Subscription

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<PAGE>

Offering (the "Revised Subscription Price"). If the Revised Subscription Price
is less than the Subscription Price, then the Company and the Selling
Shareholder will issue refunds to subscribing policyowners in the form of a
check equal to the amount of such difference multiplied by the number of Shares
subscribed for by each such policyowner. Such refunds will be mailed to
subscribers within 60 days after the closing of the Subscription Offering. If
the Revised Subscription Price is more than the Subscription Price, the
Subscription Policyowners who purchase Shares in the Subscription Offering will
not be required to pay any additional amounts for such Shares nor will there be
any adjustment in the number of Shares issued to them.

There has not been any public market for the Class A Common Stock. Some of
the major factors that may influence the determination of the Public Offering
Price or the Revised Subscription Price are, in addition to prevailing market
conditions, the historical performance of the Company, estimates of the business
potential and earning prospects of the Company, an assessment of the Company's
management, and the consideration of the above factors in relation to market
valuations of other insurance companies.

ChaseMellon Shareholder Services, L.L.C. has been appointed Transfer and
Escrow Agent in connection with the Subscription Offering. The subscription
order form and required payment for Shares subscribed for in the Subscription
Offering may be sent to the Transfer and Escrow Agent as follows:

<TABLE>
<CAPTION>
BY HAND OR OVERNIGHT DELIVERY: BY REGULAR MAIL:
<S> <C>
ChaseMellon Shareholder Services AmerUs Life Holdings, Inc.
120 Broadway, 13th Floor c/o ChaseMellon Shareholder Services
New York, NY 10271 P.O. Box 768
Midtown Station
New York, NY 10018
</TABLE>

EXERCISE OF SUBSCRIPTION RIGHTS

Each Subscription Policyowner shall have the right to subscribe in the
Subscription Offering for a minimum of 100 Shares and a maximum of 5,000 Shares.
Subscriptions may only be for whole shares. In order for Subscription
Policyowners to exercise subscription rights to receive Shares, the subscription
order form must be received by the Transfer and Escrow Agent by 4:00 P.M., New
York time, on the Subscription Expiration Date. Any person electing to purchase
Shares must submit the required payment for such Shares at that time. If a
subscription order form is not received by the Transfer and Escrow Agent by such
time, or is executed incorrectly or is received without full payment, the
associated subscription right will expire (subject to the Company's
discretionary right to waive any defect or permit correction). Once an executed
subscription order form is received by the Transfer and Escrow Agent, it may not
be modified, amended or rescinded without the consent of the Company. The
Company has the right to waive or permit correction of incomplete or improperly
executed forms, but does not represent that it will do so, and any Subscription
Policyowner not submitting such a form shall have been deemed to have waived and
released its right to subscribe for Shares.

Payment for Shares by Subscription Policyowners shall be made by check or
money order in United States dollars. If the period from the Subscription
Expiration Date to the closing of the Subscription Offering exceeds 60 days,
interest will be paid to each subscriber on all subscription amounts at the
Subscription Interest Rate from such sixtieth day until the closing of the
Subscription Offering.

Subscription Policyowners who are associated with a broker or dealer are
required to contact James A. Smallenberger, Esq., Senior Vice President and
Secretary of the Company, at the address or telephone number indicated on the
subscription order form, prior to participating in the Subscription Offering.
Participation by such persons in the Subscription Offering is only permissible
in accordance with, and subject to the limitations of, Rule 2110 of the Conduct
Rules of the National Associations of Securities Dealers, Inc. ("NASD") and the
"Free-Riding and Withholding Interpretation" promulgated thereunder. In general,
"associated with a broker/dealer" includes (i) every officer, director, general
partner, employee or agent of a broker/dealer that is a member of the NASD (a
"member"), (ii) every sole proprietor, partner, officer, director, or branch
manager of any member, or any natural person occupying

26
<PAGE>
a similar status or performing similar functions, or any natural person engaged
in the investment banking or securities business who is directly or indirectly
controlling or controlled by such member, whether or not any such person is
registered or exempt from registration with the NASD and (iii) any immediate
family member of any such person; and "immediate family" includes parents,
mother-in-law or father-in-law, husband or wife, brother or sister,
brother-in-law or sister-in-law, son-in-law or daughter-in-law, and children and
any other person who is supported, directly or indirectly, to a material extent
by any person referred to in clause (i) or (ii).

DELIVERY OF SHARE CERTIFICATES AND REFUNDS

Under the Plan, on the closing date of the Subscription Offering or as soon
thereafter as reasonably practicable (but no more than 10 business days after
the closing date), the Company and the Selling Shareholder will issue or deliver
Shares sold pursuant to the Subscription Offering and issue refunds, as
applicable, for (i) the excess of the Subscription Price over the Public
Offering Price or Revised Subscription Price, if any, or (ii) Shares subscribed
for but not purchased as a result of the Subscription Offering being
oversubscribed. There may be a substantial delay between the Subscription
Expiration Date and the delivery of share certificates and refunds after the
closing of the Subscription Offering. Any certificates or refunds returned as
undeliverable will be held by the Company until claimed by the persons legally
entitled thereto or otherwise disposed of in accordance with applicable law.
Until certificates are delivered to Subscription Policyowners, such Subscription
Policyowners may not be able to sell their shares of Class A Common Stock.

RESTRICTIONS ON TRANSFER OF SUBSCRIPTION RIGHTS

Under the Plan, Subscription Policyowners may not transfer or assign their
right to subscribe for Shares in the Subscription Offering. Persons found to be
transferring rights to subscribe for Shares in the Subscription Offering will
automatically forfeit such rights.

CANCELLATION OF THE SUBSCRIPTION OFFERING

The Company may, in its sole discretion, at any time prior to the closing of
the Subscription Offering, elect to cancel or rescind the Subscription Offering.
In such event, subscriptions for Class A Common Stock will not be executed and
all payments submitted by Subscription Policyowners in accordance with the
Subscription Offering will be refunded, together with interest thereon computed
at the Refund Interest Rate from the date of receipt of such payments until the
date of mailing of the refunds.

SUBSCRIPTION AGENT

The Chicago Corporation, a registered broker-dealer, has been engaged by the
Company to assist it in effecting the Subscription Offering by serving as
Subscription Agent. The Subscription Agent will forward copies of this
Prospectus and subscription materials to Subscription Policyowners upon request.
In addition, the Subscription Agent will be available to answer certain
questions from potential subscribers during the Subscription Period.

It is anticipated that The Chicago Corporation will be one of the
underwriters in the Public Offering. John A. Wing is a Director of the Company
and Chairman of The Chicago Corporation. See "The Public Offering" and "Plan of
Distribution."

TRANSFER AND ESCROW AGENT

Following receipt of subscription order forms from prospective subscribers,
the Transfer and Escrow Agent will, among other things, verify that (i) the
submitted checks and money orders are honored, (ii) the subscription order form
has been fully and properly completed and signed, (iii) the subscriber has not
previously submitted a subscription, and (iv) the subscriber is an eligible
policyowner.

All subscriptions which the Transfer and Escrow Agent is not able to so
verify will be rejected and returned to the prospective subscriber after
consultation with the Company.

In addition, the Transfer and Escrow Agent will receive and hold in escrow
all funds submitted by Subscription Policyowners, and will disburse funds from
escrow in the event a refund or other return of funds is required.

27
<PAGE>
THE PUBLIC OFFERING

The Company and the Selling Shareholder intend to offer all or a portion of
the shares not subscribed for in the Subscription Offering to the public in the
Public Offering. The Public Offering may, at the discretion of the Board of
Directors of the Company, close simultaneously with or at any time after the
closing of the Subscription Offering.

It is anticipated that Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette
Securities Corporation, Salomon Brothers Inc and The Chicago Corporation will
act as the representatives of the underwriters in the Public Offering. An
underwriting agreement between the Company, the Selling Shareholder and the
underwriters with respect to the Public Offering will not be executed until
after the Subscription Expiration Date. See "The Subscription Offering."

In the event that there is a Public Offering, the underwriters will receive
underwriting compensation for the shares sold in the Public Offering in an
amount to be determined by the Company, the Selling Shareholder and the
representatives of the underwriters. The Company and the Selling Shareholder
will also agree to indemnify the underwriters against certain liabilities and
expenses, including liabilities under the federal securities laws.

THE PREFERRED OFFERING

The Company has formed AmerUs Capital I (the "Trust"), a statutory business
trust organized under Delaware law, which is a wholly owned subsidiary of the
Company. The Trust, together with the Company, filed a registration statement on
October 8, 1996 under the Securities Act relating to the offering of
approximately $75 million of trust preferred securities of the Trust (the
"Preferred Securities") representing undivided beneficial interests in the
assets of such Trust. Substantially all of the assets of the Trust will be
invested in junior subordinated deferrable interest debentures (the "Junior
Subordinated Debt Securities") of the Company. The Junior Subordinated Debt
Securities will be direct, unsecured obligations of the Company that will rank
junior and subordinate in right of payment to senior indebtedness of the
Company. The Junior Subordinated Debt Securities will bear interest, payable
quarterly in arrears, subject to certain circumstances described below. In
addition, the Company will guarantee payments with respect to the Preferred
Securities, to the extent the Trust has funds available to make such payments,
including any accrued and unpaid distributions, redemption payments and
liquidation distributions.

The net proceeds of the Preferred Offering to the Company are currently
expected to be $72.4 million after giving effect to the underwriting discount
and estimated offering expenses. It is expected that the Company will use such
proceeds to repay debt outstanding under the Bank Credit Facility. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition--Liquidity and Capital Resources."

Holders of the Preferred Securities will be entitled to receive cumulative
cash distributions thereon, payable quarterly in arrears. The distribution rate
and the distribution payment date and other payment dates of the Preferred
Securities will correspond to the interest rate and interest payment dates and
other payment dates on the Junior Subordinated Debt Securities.

The Company will have the right from time to time to defer payments of
interest on the Junior Subordinated Debt Securities by extending the interest
payment period on the Junior Subordinated Debt Securities at any time for up to
20 consecutive quarters (each, an "Extension Period"), PROVIDED, that no
Extension Period may extend beyond the maturity of the Junior Subordinated Debt
Securities. If interest payments are so deferred, distributions on the Preferred
Securities will also be deferred. During such Extension Period, interest on the
Junior Subordinated Debt Securities and distributions on the Preferred
Securities will continue to accrue with interest thereon (to the extent
permitted by applicable law) compounded quarterly. The Company will agree, among
other things, not to declare or pay any

28
<PAGE>
dividends on the Company's capital stock (including the Class A Common Stock)
during any Extension Period, except stock dividends paid by the Company where
the dividend stock is the same stock as that on which the dividend is being
paid.

The Junior Subordinated Debt Securities will be redeemable by the Company,
in whole or in part, from time to time, on or after dates specified in the
Preferred Offering or at any time, in whole or in part, in certain circumstances
upon the occurrence of certain tax events or investment company events. If the
Company redeems Junior Subordinated Debt Securities, the Trust must redeem
Preferred Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Junior Subordinated Debt Securities so
redeemed plus accrued and unpaid distributions thereon to the date fixed for
redemption. In addition, upon the occurrence of certain events arising from a
change in law or a change in legal interpretation regarding tax or investment
company matters, unless the Junior Subordinated Debt Securities are redeemed
under limited circumstances, the Trust will be dissolved, with the result that
the Junior Subordinated Debt Securities will be distributed to the holders of
the Preferred Securities of the Trust, on a PRO RATA basis, in lieu of any cash
distribution.

In the event of the involuntary or voluntary dissolution, winding up or
termination of the Trust, the holders of Preferred Securities will be entitled
to receive for each such Preferred Security, a liquidation amount of $25 plus
accrued and unpaid distributions thereon (including interest thereon) to the
date of payment, unless, in connection with such dissolution, the Junior
Subordinated Debt Securities are distributed to the holders of the Preferred
Securities.

The consummation of the Offerings is not conditioned upon completion of the
Preferred Offering, and there can be no assurance that the Preferred Offering
will be consummated.

USE OF PROCEEDS

The proceeds to the Company from the Offerings, if any, may vary according
to: (i) the total number of Shares subscribed for by Subscription Policyowners
in the Subscription Offering and the Subscription Price (or Revised Subscription
Price); and (ii) the total number of shares sold in the Public Offering and the
Public Offering Price, if the Company completes the Public Offering.

Assuming that the Public Offering Price (or the Revised Subscription Price
if the Public Offering is not consummated) is equal to $15.50 per Share, the net
proceeds to the Company from the Offerings are expected to be approximately $35
million after deducting the Company's share of the estimated expenses of the
Offerings. All such estimated proceeds will be used by the Company to repay debt
under the Bank Credit Facility. The Company will not receive any proceeds from
the sale of Class A Common Stock by the Selling Shareholder.

The Company currently estimates the net proceeds it would receive from the
Preferred Offering, if completed, to be $72.4 million after giving effect to the
underwriting discount and estimated offering expenses of the Company. It is
expected that the Company would use such proceeds to repay debt under the Bank
Credit Facility. See "The Preferred Offering" and "Management's Discussion and
Analysis of Results of Operation and Financial Condition--Liquidity and Capital
Resources."

MARKET FOR COMMON STOCK

Prior to the Offerings, there has been no public market for shares of either
class of the Company's Common Stock. Application has been made for quotation of
the Class A Common Stock on the Nasdaq National Market under the symbol "AMRS".
There can be no assurance, however, that an active market for the Class A Common
Stock will develop or, if developed, will continue. See "Risk Factors--No Prior
Market for Common Stock; Possible Volatility of Common Stock Price."

29
<PAGE>
DIVIDEND POLICY

The Company's Board of Directors currently intends to pay a quarterly
dividend of $ per share of Common Stock, commencing with the quarter ending
on March 31, 1997. 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 payment of
dividends by AmerUs Life and other factors deemed relevant by the Company's
Board of Directors. There is no requirement or assurance that the Company will
declare and pay any dividends. For a discussion of the Company's cash sources
and needs, see "Management's Discussion and Analysis of Results of Operations
and Financial Condition-- Liquidity and Capital Resources--The Company."

The Company is an insurance holding company whose principal asset will
consist of all of the outstanding shares of the common stock of AmerUs Life. 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 AmerUs Life in the form of
dividends or loans. In connection with the Distribution, the Company has agreed
with the Iowa Commissioner not to cause AmerUs Life to pay any additional
shareholder dividends in 1996. In addition, as a result of the Distribution,
AmerUs Life will not be able to pay dividends to the Company in the 12 month
period following the Distribution without the prior approval of the Iowa
Commissioner. However, AmerUs Life has the ability to loan funds to the Company
subject to certain regulatory restrictions. At September 30, 1996, AmerUs Life
could advance up to $120 million to the Company without prior approval by the
Iowa Commissioner. See "Risk Factors--Holding Company Structure; Limitations on
Dividends," "Supervision and Regulation" and "Description of the Capital
Stock--Common Stock."

Under the Bank Credit Facility, the Company is prohibited from paying
dividends on its common stock in excess of an amount equal to 4% of the
Company's consolidated net worth as of the last day of the preceding fiscal
year.

In connection with the Preferred Offering, the Company will agree not to
declare or pay any dividends on the Company's capital stock (including the Class
A Common Stock) during any Extension Period, 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 dividends on the Preferred Securities have been paid. See "The
Preferred Offering."

30
<PAGE>
CAPITALIZATION

The following table sets forth the unaudited consolidated capitalization of
the Company at September 30, 1996 on an actual basis and on a pro forma basis as
adjusted to reflect (i) the Capital Contribution, (ii) the sale of 2.5 million
shares of Class A Common Stock in the Offerings at a per share price of $15.50,
as if such sales had occurred as of September 30, 1996 (after deducting the
underwriting discount and estimated offering expenses payable by the Company),
(iii) the issuance of the Junior Subordinated Debt Securities in connection with
the Preferred Offering and (iv) the establishment of the Bank Credit Facility,
as if such Capital Contribution, sale, issuance and establishment had occurred
as of September 30, 1996. See "Use of Proceeds," "The Subscription Offering,"
"The Public Offering" and "The Preferred Offering." This table should be read in
conjunction with the Consolidated Financial Statements, including the related
notes and report thereon and the Unaudited Pro Forma Condensed Consolidated
Financial Statements of the Company appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1996
--------------------------------------------------------------------------------------------------
PRO FORMA FOR
PRO FORMA THE CAPITAL
ADJUSTMENTS FOR PRO FORMA FOR CONTRIBUTIONS,
THE CAPITAL THE CAPITAL PRO FORMA AS ADJUSTED FOR PRO FORMA
CONTRIBUTION, AND CONTRIBUTION ADJUSTMENTS FOR THE OFFERINGS ADJUSTMENTS FOR
THE BANK CREDIT AND THE BANK THE AND THE BANK THE PREFERRED
HISTORICAL FACILITY(A) CREDIT FACILITY OFFERINGS(B) CREDIT FACILITY OFFERING(C)
----------- ----------------- --------------- --------------- --------------- ---------------
(IN MILLIONS)

<S> <C> <C> <C> <C> <C> <C>
Long Term Debt................ $ 45.1 $ 166.2 $ 211.3 $ (35.0) $ 176.3 $ (72.4)
----------- ------- ------- ------ ------- ------
Company-obligated
mandatorily-redeemable
Preferred Securities(C)...... -- -- -- -- -- 75.0
------
Equity:(D)
Preferred Stock, no par
value, 25,000,000 shares
authorized; no shares
issued and outstanding..... -- -- -- -- -- --
Class A Common Stock, no par
value, 75,000,000 shares
authorized; 14,500,000
shares issued and
outstanding historical and
17,000,000 shares
pro forma.................. 14.5 -- 14.5 2.5 17.0 --
Class B Common Stock, no par
value, 50,000,000 shares
authorized; 5,000,000
shares issued and
outstanding................ 5.0 -- 5.0 -- 5.0 --
Additional paid-in
capital.................... -- -- -- 32.5 32.5 --
Retained earnings........... 473.4 (79.0) 394.4 -- 394.4 (1.7)
Unrealized appreciation of
invested assets, net....... 22.7 -- 22.7 -- 22.7 --
----------- ------- ------- ------ ------- ------
Total equity.............. 515.6 (79.0) 436.6 35.0 471.6 (1.7)
----------- ------- ------- ------ ------- ------
Total capitalization.......... $ 560.7 $ 87.2 $ 647.9 -- $ 647.9 $ .9
----------- ------- ------- ------ ------- ------
----------- ------- ------- ------ ------- ------

PRO FORMA FOR
THE CAPITAL
CONTRIBUTIONS,
AS ADJUSTED FOR
THE OFFERINGS,
THE BANK CREDIT
FACILITY AND
THE PREFERRED
OFFERING
---------------

<S> <C>
Long Term Debt................ $ 103.9
-------
Company-obligated
mandatorily-redeemable
Preferred Securities(C)...... 75.0
-------
Equity:(D)
Preferred Stock, no par
value, 25,000,000 shares
authorized; no shares
issued and outstanding..... --
Class A Common Stock, no par
value, 75,000,000 shares
authorized; 14,500,000
shares issued and
outstanding historical and
17,000,000 shares
pro forma.................. 17.0
Class B Common Stock, no par
value, 50,000,000 shares
authorized; 5,000,000
shares issued and
outstanding................ 5.0
Additional paid-in
capital.................... 32.5
Retained earnings........... 392.7
Unrealized appreciation of
invested assets, net....... 22.7
-------
Total equity.............. 469.9
-------
Total capitalization.......... $ 648.8
-------
-------
</TABLE>

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

(A) Represents AmerUs Life's Capital Contribution to or for the benefit of the
Non-Life Insurance Subsidiaries of certain net assets having an aggregate
net carrying value of approximately $79 million. Also represents the
establishment of the Bank Credit Facility, consisting of $100 million in
term debt and a $75 million revolving credit facility.

(B) Represents the issuance of Class A Common Stock (net of related issuance
costs).

(C) Represents the issuance of the Preferred Securities by the Trust (net of
related issuance costs). One hundred percent of the assets of the Trust will
consist of approximately $75 million in principal amount of the Junior
Subordinated Debt Securities of the Company. The financial statements of the
Trust will be reflected in the Company's consolidated financial statements
with the Preferred Securities shown as Company-obligated
mandatorily-redeemable Preferred Securities of the Trust.

(D) Retroactively restated to give effect to the issuance of Class A Common
Stock and Class B Common Stock to AmerUs Group.

31
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

The following table sets forth certain financial and operating data of the
Company. The selected consolidated financial data below for each of the three
years ending December 31, 1995 are derived from the Consolidated Financial
Statements of the Company, which financial statements have been audited by KPMG
Peat Marwick LLP, independent auditors. The selected consolidated financial data
provided below for each of the nine-month periods ending September 30, 1996 and
1995 and for each of the two years ending December 31, 1992 are derived from the
unaudited consolidated financial statements of the Company. In the opinion of
management, the unaudited financial data for the two years ended December 31,
1992 presents fairly the consolidated financial statements for such periods in
conformity with generally accepted accounting principles.

The foregoing give effect to the Reorganization and the Distribution as if
both had been completed prior to the periods presented, but do not give effect
to the Capital Contribution. In the opinion of management, the financial
information presented for all interim periods reflects all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of such data. Results for the nine-month periods ending September
30, 1996 and 1995 are not necessarily indicative of results that may be expected
for any other interim period or the year as a whole. This data should be read in
conjunction with (i) "Management's Discussion and Analysis of Results of
Operations and Financial Condition," (ii) the audited Consolidated Financial
Statements of the Company as of December 31, 1995 and 1994, and for each of the
years in the three-year period ended December 31, 1995, which financial
statements have been audited by KPMG Peat Marwick LLP, independent auditors,
together with the related notes and the report thereon, (iii) the unaudited
consolidated financial statements of the Company as of September 30, 1996 and
1995 and for each of the nine-month periods ended September 30, 1996 and 1995,
and (iv) other financial data included elsewhere in this Prospectus.

32
<PAGE>

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

(A) The merger of Old AML into Central Life, which was consummated in 1994, has
been accounted for as a pooling of interests transaction.

33
<PAGE>

(D) Effective May 1996, substantially all new sales of individual deferred
annuities are made through the Ameritas Joint Venture. See
"Business--Ameritas Joint Venture."

34
<PAGE>
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma condensed Consolidated Financial
Statements give effect to (i) the establishment of the Closed Block, (ii) the
Capital Contribution, (iii) the sale of 2.5 million shares of Class A Common
Stock in the Offerings at an estimated per share price of $15.50 (after
deducting the underwriting discount and assuming no exercise of the
underwriters' over-allotment option), (iv) the Preferred Offering, and (v) the
establishment of the Bank Credit Facility, as if the establishment of the Closed
Block, the Capital Contribution, the Offerings, the Preferred Offering and the
Bank Credit Facility had occurred as of September 30, 1996, for the purposes of
the unaudited pro forma condensed consolidated balance sheet and as of the
beginning of the respective periods for the purposes of the consolidated pro
forma condensed consolidated statements of income for the nine months ended
September 30, 1996 and the year ended December 31, 1995.

The unaudited pro forma information reflects estimated net proceeds from the
Offerings of $35 million and estimated net proceeds from the Preferred Offering
of $72.4 million (in each case after deducting the underwriting discount and
estimated offering expenses payable by the Company). The $35 million estimated
net proceeds from the Offerings will be used by the Company to retire debt under
the Bank Credit Facility. The estimated net proceeds from the Preferred Offering
will be used to repay debt under the Bank Credit Facility. At the time of the
Distribution, $100 million will be borrowed by the Company as term debt and $75
million under the revolving loan component of the Bank Credit Facility. The
Company intends to use the proceeds from such borrowings to make a $125 million
capital contribution to AmerUs Life and to purchase a $50 million surplus note
issued by AmerUs Life. See "Use of Proceeds," "The Subscription Offering" and
"The Preferred Offering."

The Unaudited Pro Forma Condensed Consolidated Financial Statements are
based on available information and on assumptions management believes are
reasonable and that reflect the effects of the transactions described above.
Such Unaudited Pro Forma Condensed Consolidated Financial Statements are
provided for informational purposes only and should not be construed to be
indicative of the Company's consolidated financial position or results of
operations had these transactions been consummated on the dates assumed and do
not in any way represent a projection or forecast of the Company's consolidated
financial position or results of operations for any future date or period. The
Unaudited Pro Forma Condensed Consolidated Financial Statements should be read
in conjunction with the notes thereto, the audited Consolidated Financial
Statements of the Company, together with the related notes and report thereon,
the unaudited consolidated statements of the Company included elsewhere in this
Prospectus and with the information set forth under "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and "Business."

35
<PAGE>
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------------------------------------------------------------------
PRO FORMA PRO FORMA
OFFERINGS AND ASSUMING ASSUMING NO
REORGANIZATION PREFERRED PREFERRED PREFERRED
HISTORICAL (A) RELATED ADJUSTMENTS OFFERING (E) OFFERING (F) OFFERING (G)
------------- -------------------- ------------- ----------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS:
Invested assets
Fixed maturities..................... $ 2,297.6 $ 171.5 (B)(D $ 2,469.1 $ 2,469.1
Equity securities.................... 74.6 (0.7)(B) 73.9 73.9
Short-term investments............... 12.0 12.0 12.0
Mortgage loans....................... 260.2 (9.7)(B) 250.5 250.5
Real estate.......................... 40.0 (34.2)(B) 5.8 5.8
Policy loans......................... 64.0 64.0 64.0
Other investments.................... 61.8 61.8 61.8
Closed Block investments............. 1,025.3 1,025.3 1,025.3
------------- ------- ------ ----------- -------------
Total investments.................... 3,835.5 126.9 0.0 3,962.4 3,962.4
Accrued investment income.............. 42.1 42.1 42.1
Deferred policy acquisition costs...... 123.5 123.5 123.5
Property and equipment, net............ 13.3 (8.7)(B) 4.6 4.6
Deferred income taxes.................. 4.4 4.4 4.4
Other assets........................... 61.1 61.1 61.1
Closed Block other assets.............. 211.9 211.9 211.9
------------- ------- ------ ----------- -------------
Total assets....................... $ 4,291.8 $ 118.2 $ 0.0 $ 4,410.0 $ 4,410.0
------------- ------- ------ ----------- -------------
------------- ------- ------ ----------- -------------
LIABILITIES:
Policyowner reserves and policyowner
funds................................. $ 2,113.2 $ 2,113.2 $ 2,113.2
Other liabilities...................... 116.6 31.0(B) (0.9) 146.7 146.7
Long-term debt......................... 45.1 131.2 (B)(C)(D (72.4) 103.9 176.3
Closed Block liabilities............... 1,501.3 1,501.3 1,501.3
------------- ------- ------ ----------- -------------
Total liabilities.................. 3,776.2 162.2 (73.3) 3,865.1 3,938.4
Company-obligated mandatorily
redeemable preferred securities....... -- 75.0 75.0 0.0
SHAREHOLDERS' EQUITY:
Preferred stock, no par value,
20,000,000 shares authorized, no
shares issued and outstanding......... --
Common stock, Class A, no par value,
75,000,000 shares authorized;
shares issued and outstanding
historical; shares pro
forma................................. 14.5 2.5(C) 17.0 17.0
Common stock, Class B, no par value,
50,000,000 shares authorized;
5,000,000 shares issued and
outstanding........................... 5.0 5.0 5.0
Additional paid in capital............. 32.5(C) 32.5 32.5
Retained earnings...................... 473.4 (79.0)(B) (1.7) 392.7 394.4
Unrealized appreciation of available
for sale securities................... 22.7 22.7 22.7
------------- ------- ------ ----------- -------------
Total shareholders' equity......... 515.6 (44.0) (1.7) 469.9 471.6
------------- ------- ------ ----------- -------------
Total liabilities and shareholders'
equity............................ $ 4,291.8 $ 118.2 $ 0.0 $ 4,410.0 $ 4,410.0
------------- ------- ------ ----------- -------------
------------- ------- ------ ----------- -------------
</TABLE>

(The Accompanying Notes are an integral part of this Unaudited
Pro Forma Condensed Consolidated Balance Sheet)

36
<PAGE>
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1996
------------------------------------------------------------------------------
PRO FORMA PRO FORMA
OFFERINGS AND ASSUMING ASSUMING NO
REORGANIZATION PREFERRED PREFERRED PREFERRED
HISTORICAL (A) RELATED ADJUSTMENTS OFFERING (E) OFFERING (F) OFFERING (G)
------------- --------------------- ------------ ----------- -------------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
REVENUES:
Insurance premiums................. $ 133.7 $ (95.8)(H) $ 37.9 $ 37.9
Product charges.................... 39.1 (9.1)(H) 30.0 30.0
Net investment income.............. 189.3 (50.9)(B)(H) 138.4 138.4
Realized gains on investments...... 62.5 1.4(H) 63.9 63.9
Other.............................. 2.3 1.5(I) 3.8 3.8
Contribution from the Closed
Block............................. 2.7 (2.6)(H) 0.1 0.1
------------- ------- ------------ ----------- -------------
Total revenues..................... 429.6 (155.5) 0.0 274.1 274.1
------------- ------- ------------ ----------- -------------
BENEFITS AND EXPENSES:
Total policyowner benefits......... 222.9 (110.7)(H) 112.2 112.2
Total expenses..................... 73.8 (13.4)(H)(M)(K)(N) 4.2(L) 64.6 60.4
Dividends to policyowners.......... 26.3 (26.3)(H)
------------- ------- ------------ ----------- -------------
Total benefits and expenses........ 323.0 (150.4) 4.2 176.8 172.6
------------- ------- ------------ ----------- -------------
Income before income taxes........... 106.6 (5.1) (4.2) 97.3 101.5
Income tax expense................... 40.4 (6.3)(J)(O) (1.5)(O) 32.6 34.1
------------- ------- ------------ ----------- -------------
Net income........................... $ 66.2 $ 1.2 $ (2.7) $ 64.7 $ 67.4
------------- ------- ------------ ----------- -------------
------------- ------- ------------ ----------- -------------
Net income per share................. $ 3.39 $ 2.94 $ 3.06
Shares used in the calculation of net
income per share.................... 19.5 22.0 22.0
</TABLE>

(The Accompanying Notes are an integral part of this
Unaudited Pro Forma Condensed Consolidated Statement of Income)

37
<PAGE>
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
------------------------------------------------------------------------------
PRO FORMA PRO FORMA
OFFERINGS AND ASSUMING ASSUMING NO
REORGANIZATION PREFERRED PREFERRED PREFERRED
HISTORICAL (A) RELATED ADJUSTMENTS OFFERING (E) OFFERING (F) OFFERING (G)
------------- --------------------- ------------ ----------- -------------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
REVENUES:
Insurance premiums................. $ 244.1 $ (182.2)(H) $ 61.9 $ 61.9
Product charges.................... 57.3 (16.9)(H) 40.4 40.4
Net investment income.............. 285.2 (100.1)(B)(H) 185.1 185.1
Realized gains on investments...... 51.4 (0.9)(H) 50.5 50.5
Other.............................. 5.4 2.0(I) 7.4 7.4
Contribution from the Closed
Block............................. 7.6(H) 7.6 7.6
------------- ------- ------------ ----------- -------------
Total revenues..................... 643.4 (290.5) 0.0 352.9 352.9
------------- ------- ------------ ----------- -------------
BENEFITS AND EXPENSES:
Total policyowner benefits......... 374.6 (200.3)(H) 174.3 174.3
Total expenses..................... 108.9 (34.0)(H)(K)(M)(N) 4.8(L) 79.7 74.9
Dividends to policyowners.......... 49.4 (49.4)(H)
------------- ------- ------------ ----------- -------------
Total benefits and expenses........ 532.9 (283.7) 4.8 254.0 249.2
------------- ------- ------------ ----------- -------------
Income before income taxes........... 110.5 (6.8) (4.8) 98.9 103.7
Income tax expense................... 41.2 (2.4)(O) (1.7)(O) 37.1 38.8
------------- ------- ------------ ----------- -------------
Net income........................... $ 69.3 $ (4.4) $ (3.1) $ 61.8 $ 64.9
------------- ------- ------------ ----------- -------------
------------- ------- ------------ ----------- -------------
Net income per share................. $ 3.54 $ 2.81 $ 2.95
Shares used in the calculation of net
income per share.................... 19.5 22.0 22.0
</TABLE>

(The Accompanying Notes are an integral part of this
Unaudited Pro Forma Condensed Consolidated Statement of Income)

38
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(A) As a result of the Distribution which caused its Non-Life Insurance
Subsidiaries to be distributed to AmerUs Group. Accordingly, the Consolidated
Financial Statements include only the accounts and operations, after
eliminations, of the Company and its wholly-owned life insurance subsidiaries,
principally, AmerUs Life and American Vanguard Life Insurance Company.

(B) The Capital Contribution consisted of a contribution of net assets as
follows:

<TABLE>
<CAPTION>
BOOK VALUE
SEPTEMBER 30, 1996
---------------------
(IN MILLIONS)
<S> <C>
Fixed maturity securities............................................... $ 3.5
Equity securities....................................................... 0.7
Mortgage loans.......................................................... 9.7
Real estate............................................................. 34.2
Property and equipment, net............................................. 8.7
Cash.................................................................... 31.0
Long-term debt assumed.................................................. (8.8)
-----
$ 79.0
-----
-----
</TABLE>

Net investment income has been reduced by $0.2 million and $0.4 million for
the nine months ended September 30, 1996 and the year ended December 31, 1995,
respectively, which represents the actual net investment income of the assets
distributed for such periods.

(C) Represents estimated net proceeds to the Company of $35 million from
the issuance of 2,500,000 shares of Class A Common Stock and the use of the
proceeds to retire long-term debt, assuming all shares are sold in the Public
Offering at a price of $15.50 per share.

(D) Represents $175 million of proceeds from the Bank Credit Facility and
the investment of such proceeds in fixed maturity securities. No adjustment has
been included to reflect the investment earnings that would have resulted from
the investment of the proceeds. If such proceeds would have been invested at the
average rate of return on the Company's investment portfolio for each respective
period, $10.3 million and $13.7 million would have been earned in the nine
months ended September 30, 1996 and the year ended December 31, 1996.

(E) Represents estimated net proceeds of $72.4 million from the Preferred
Offering and the use of such proceeds to repay long-term debt. See "The
Preferred Offering."

(F) Giving effect to the establishment of the Closed Block, management fee
income, the Capital Contribution, the Offerings, the Bank Credit Facility, and
the Preferred Offering.

(G) Giving effect to the establishment of the Closed Block, management fee
income, the Capital Contribution, the Offerings and the Bank Credit Facility,
but not the Preferred Offering.

(H) The unaudited pro forma condensed consolidated statements of income
reflect an allocation of revenues and expenses to the Closed Block based on
certain estimates and assumptions that management believes are reasonable. The
contribution from the Closed Block reflected in the unaudited pro forma
condensed consolidated statements of income is not necessarily indicative of the
Closed Block's contribution had the Closed Block been established as of January
1, 1995 or of the expected contribution for any future period.

The Closed Block will include only those revenues, benefits, expenses and
dividends considered in funding the Closed Block. See "The Reorganization and
Distribution of the Non-Life Insurance Subsidiaries--Establishment and Operation
of the Closed Block." The pre-tax contribution from the Closed Block is reported
as a single line item of total revenues from continuing operations. Many
expenses related to the Closed Block operations are charged to operations
outside the Closed Block, accordingly,

39
<PAGE>
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, therefore, disproportionate to the business
outside the Closed Block. Income tax expense applicable to the Closed Block,
which will be funded in the Closed Block, is reflected as a component of income
tax expense.

The excess of Closed Block liabilities over Closed Block assets as of
September 30, 1996 represents the total estimated future contribution from the
Closed Block expected to emerge from operations in the Closed Block after income
taxes. If the actual contribution from the Closed Block in any given period
equals or exceeds the expected contribution for such period as determined at the
establishment of the Closed Block, the expected contribution would be recognized
in income from continuing operations for that period. Any excess of the actual
contribution over the expected contribution would also be recognized in income
from continuing operations to the extent that the aggregate expected
contribution for all prior periods exceeded the aggregate actual contribution.
Any remaining excess of actual contribution over expected contributions would be
accrued in the Closed Block as a liability for future policyowners' dividends.
This accrual for the future dividends effectively limits the actual Closed Block
contribution recognized in income from continuing operations to the Closed Block
contribution expected to emerge from operation of the Closed Block as determined
as of the date of establishment of the Closed Block.

The following is a summary of Closed Block pro forma income statement
adjustments for the respective periods:

<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1996 DECEMBER 31, 1995
-------------------- -------------------
(IN MILLIONS)
<S> <C> <C>
CLOSED BLOCK REVENUES
Insurance premiums..................................................... $ 95.8 $ 182.2
Product charges........................................................ 9.1 16.9
Net investment income.................................................. 50.7 99.7
Realized gains (losses) on investments................................. (1.4) 0.9
------- -------
$ 154.2 $ 299.7
CLOSED BLOCK EXPENSES
Total policyowner benefits............................................. 110.7 200.3
Total Expenses......................................................... 19.8 42.4
Dividends to policyowners.............................................. 26.3 49.4
------- -------
$ 156.8 $ 292.1
------- -------
------- -------
Contributions from the Closed Block.................................... $ (2.6) $ 7.6
------- -------
------- -------
</TABLE>

If over the period the policies and contracts in the Closed Block remain in
force the actual contribution from the Closed Block is less than the expected
contribution from the Closed Block, only such actual contribution would be
recognized in income from continuing operations. If the actual contribution from
the Closed Block in any given period is less than the expected contribution for
that period and changes in dividend scales are inadequate to offset the negative
performance in relation to the expected performance, the contribution inuring to
shareholders of the Company will be reduced. If a liability for policyowners'
dividends had been previously established in the Closed Block because the actual
contribution to the relevant date had exceeded the expected contribution to such
date, such liability would be reduced (but not below zero) in any periods in
which the actual contribution for that period is less than the expected
contribution for such period. See "The Reorganization and Distribution of the
Non-Life Insurance Subsidiaries" and "Management's Discussion of Results of
Operations and Financial Conditions."

(I) Represents fixed fee for management services and assistance to be
received under an Intercompany Agreement between AmerUs Group and the Company as
compensation for services rendered by Company employees. See "Certain
Transactions and Relationships--Intercompany Agreement--Management Services."

40
<PAGE>

(J) Represents the elimination of $4.5 million of the mutual company equity
add-on tax for the six months ended June 30, 1996, which is applicable only to
mutual life insurance companies. This adjustment can vary significantly from
year to year, based on rates published by the IRS. The Company believes that
this tax will not be applicable to the Company after the Reorganization due to
AmerUs Life's conversion into a stock corporation.

(K) Total expenses have been reduced by $0.9 million and $1.1 million for
the nine months ended September 30, 1996 and the year ended December 31, 1995,
respectively, as a result of the assignment of a certain employment contract to
AmerUs Group.

(L) Represents dividends of $5.1 million and $6.8 million for the nine
months ended September 30, 1996 and the year ended December 31, 1995,
respectively, on the shares issued in conjunction with the Preferred Offering
which are assumed to be payable at 9% per annum and the offering expenses of
$2.6 million which are classified as interest expense, net of the reduction in
interest expense resulting from the retirement of long-term debt from the
proceeds from the Preferred Offering of $3.5 million and $4.6 million for the
nine months ended September 30, 1996 and the year ended December 31, 1995,
respectively.

(M) Represents interest expense under the Bank Credit Facility based upon a
rate of 6.25% per annum, and amortization of debt expense. The resulting
adjustment was $8.9 million and $11.7 million for the nine months ended
September 30, 1996 and the year ended December 31, 1995, respectively.

(N) Represents the reduction in interest expense under the Bank Credit
Facility resulting from the application of the proceeds from the Offerings to
retire long-term debt. The adjustment was $1.6 million and $2.2 million for the
nine months ended September 30, 1996 and the year ended December 31, 1995,
respectively.

(O) Represents the income tax effect on the net pro forma adjustments.

41
<PAGE>
ORGANIZATIONAL STRUCTURE

The following chart illustrates the general organization of AMHC and its
subsidiaries, including the Company, after the Offerings:

[GRAPH]

* Assuming no exercise of the underwriters' over-allotment option.

** The Non-Life Insurance Subsidiaries consist of API, AmerUs Bank, and Iowa
Realty Co., Inc., and each of their respective subsidiaries.

*** AmerUs Life participates in the Ameritas Joint Venture through its ownership
interest in AMAL Corporation, a Nebraska corporation ("AMAL"). See
"Business--Ameritas Joint Venture."

42
<PAGE>
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 INCLUDED ELSEWHERE IN THIS PROSPECTUS.

BACKGROUND

THE REORGANIZATION, THE CAPITAL CONTRIBUTION AND THE DISTRIBUTION

The Company is an insurance holding company formed on August 1, 1996, in
connection with the Reorganization of American Mutual Life on June 30, 1996. As
part of the Reorganization, all of the shares of capital stock of AmerUs Life
were issued to AMHC. Subsequent to the Reorganization, on August 1, 1996, AMHC
contributed all of its shares of capital stock of AmerUs Life to AmerUs Group.
On August 1, 1996, all of the shares of the Company's capital stock were issued
to AmerUs Group. See "The Reorganization and Distribution of the Non-Life
Insurance Subsidiaries."

Prior to the Distribution, AmerUs Life made the Capital Contribution to or
for the benefit of the Non-Life Insurance Subsidiaries. The Capital Contribution
consisted of cash and other property having a net carrying value of
approximately $79 million. Following the Capital Contribution, a series of
transactions were undertaken by the Company and its affiliates. AmerUs Life
effected the Distribution pursuant to which it distributed the Non-Life
Insurance Subsidiaries to AmerUs Group. Immediately after the Distribution,
AmerUs Group contributed all of its shares of common stock in AmerUs Life to the
Company. Under this structure, the Company is an intermediate holding company,
with AmerUs Group as its direct parent company and AmerUs Life as its
wholly-owned subsidiary. Under Iowa law, AMHC is required to retain direct or
indirect ownership and control of shares representing a majority of the vote of
the outstanding capital stock of the Company. Immediately following the
Distribution, the Company entered into the Bank Credit Facility, pursuant to
which it borrowed $100 million in term debt and $75 million through a revolving
line of credit. The Company used the proceeds from such borrowings to make a
$125 million capital contribution to AmerUs Life and to purchase a $50 million
surplus note from AmerUs Life. The Company will use the proceeds of the
Offerings and the Preferred Offering to repay such borrowings.

The Distribution effectively separated AMHC's non-life insurance businesses
from the life insurance businesses owned by the Company, such that the companies
engaged in non-life insurance businesses will no longer be subsidiaries of the
Company. See "The Reorganization and Distribution of the Non-Life Insurance
Subsidiaries."

ACCOUNTING TREATMENT

The Selected Consolidated Financial and Operating Data, the Consolidated
Financial Statements and other financial data of the Company presented herein
give effect to the Reorganization and the Distribution as if both had been
completed prior to the periods presented (including giving effect to the
establishment of the Closed Block as of June 30, 1996), but do not give effect
to the Capital Contribution.

AMERITAS JOINT VENTURE

Under the Ameritas Joint Venture, the Company will no longer offer DEFERRED
FIXED ANNUITIES for sale to new customers except through the Ameritas Joint
Venture, although the Company will continue to issue renewal and replacement
annuity contracts with respect to annuity contracts issued by it prior to the
formation of the Ameritas Joint Venture. Consequently, future sales of fixed
annuities by the Company will be substantially reduced, which will have an
effect on future investment income and product charges of the Company.
Management believes that any reductions in net income resulting from the
curtailment of direct annuity sales by the Company will be more than offset by
management fees and by the Company's increased equity interest in the net income
of the Ameritas Joint Venture.

43
<PAGE>
OVERVIEW

The Company is engaged in the business of underwriting, marketing and
distributing a broad range of individual life insurance and annuity products to
individuals and businesses in 45 states and the District of Columbia. The
Company's primary product offerings consist of whole life, universal life and
term life insurance policies and fixed annuities. Since April 1, 1996 the
Company has been a party to the Ameritas Joint Venture with Ameritas Life
Insurance Corp., through which it now markets fixed annuities and has begun to
sell variable annuities and variable life insurance products. See
"Business--Products" and "Business--Ameritas Joint Venture."

In accordance with 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 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 deferred policy acquisition costs, are capitalized and
amortized as an expense 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.

THE CLOSED BLOCK

In connection with the Reorganization, the Closed Block was established.
Insurance policies which had a dividend scale in effect as of June 30, 1996 were
included in the Closed Block. The Closed Block is designed to provide reasonable
assurance to owners of insurance policies included therein that, after the
Reorganization, assets will be available to maintain the dividend scales and
interest credits in effect for 1995 if the experience underlying such scales and
credits continues. See "Risk Factors--The Closed Block" and "The Reorganization
and Distribution of the Non-Life Insurance Subsidiaries--Establishment and
Operation of the Closed Block." Although the Closed Block does not affect the
net income of the Company, the financial presentation of the results of
operations and financial position of the Company is affected.

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 (losses) on
investments, policyowner benefits and dividends attributable to the Closed
Block, less certain minor expenses including amortization of deferred policy
acquisition costs, are

44
<PAGE>

shown as a net number under the caption the "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. Also, all investments
allocated to the Closed Block are grouped together and shown as a single item
entitled "Closed Block Investments," and all other assets allocated to the
Closed Block are grouped together and shown as a separate item entitled "Closed
Block Assets." Likewise, all liabilities attributable to the Closed Block are
combined and disclosed as the "Closed Block Liabilities." See "Unaudited Pro
Forma Condensed Consolidated Financial Statements."

COMBINED RESULTS OF OPERATIONS

Since the operating results from the Closed Block for the three months ended
September 30, 1996 are reported on one line of the income statement,
"Contribution from the Closed Block," to facilitate comparability with 1995 the
following table presents the results of operations for the nine months ended
September 30, 1996 on a combined basis as if the Closed Block had not been
formed. Management's discussion and analysis addresses the combined results of
operations.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1996
-----------------------------------
CLOSED
AS REPORTED BLOCK COMBINED
----------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Insurance premiums........................................................ $ 133,704 $ 48,747 $ 182,451
Product charges........................................................... 39,135 4,657 43,792
Net investment income..................................................... 189,293 26,826 216,119
Realized gains (losses) on investments.................................... 62,555 70 62,625
Other income.............................................................. 2,280 0 2,280
Contribution from the Closed Block........................................ 2,659 (2,659) 0
----------- --------- -----------
Total revenues............................................................ 429,626 77,641 507,267
Benefits and expenses:
Policyowner benefits...................................................... 222,929 51,028 273,957
Underwriting, acquisition and insurance expenses.......................... 41,892 1,038 42,930
Amortization of deferred policy acquisition costs......................... 31,865 11,244 43,109
Dividends to policyowners................................................. 26,343 14,331 40,674
----------- --------- -----------
323,029 77,641 400,670
Income before income taxes and cumulative effect of change in accounting
principles................................................................. 106,597 0 106,597
Income tax expenses......................................................... 40,403 0 40,403
----------- --------- -----------
Income before cumulative effect of change in accounting principles.......... 66,194 0 66,194
Cumulative effect of change in accounting principle, net of tax............. 0 0 0
----------- --------- -----------
Net income.................................................................. $ 66,194 $ 0 $ 66,194
----------- --------- -----------
----------- --------- -----------
</TABLE>

45
<PAGE>

ADJUSTED OPERATING INCOME

The following table reflects net income adjusted to eliminate certain items
(net of applicable income taxes) which management believes are not necessarily
indicative of overall operating trends, including net realized gains or losses
on investments. Adjusted operating income does not constitute net income
computed in accordance with generally accepted accounting principles.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net income........................................ $ 66,194 $ 54,008 $ 69,348 $ 6,667 $ 31,209 $ 38,753 $ 44,847
Net realized (gains) losses on investments (A).... (40,056) (25,960) (32,244) 11,223 (10,187) (6,646) (8,547)
Merger-related costs (B).......................... 851 1,451 6,882
Equity add-on tax (C)............................. 4,480 9,585
Reorganization costs (D).......................... 726 115 1,426
Adoption of SFAS 106 (E).......................... 3,214
Curtailment gain (F).............................. (2,015)
--------- --------- --------- --------- --------- --------- ---------
Adjusted operating income......................... $ 31,344 $ 29,014 $ 37,966 $ 34,357 $ 24,236 $ 32,107 $ 36,300
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Adjusted operating income per share............... $ 1.61 $ -- $ 1.95 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
</TABLE>

- ------------------
(A) Represents realized gains or losses on investments less that portion of the
amortization of deferred policy acquisition costs adjusted for income taxes
on such amounts.
(B) Effective December 31, 1994, Old AML merged into Central Life; these amounts
are costs related to the merger and include early retirement and severance
costs, legal, consulting, postage and printing costs and costs associated
with the establishment of a charitable trust.

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

(D) Represents costs directly related to the Reorganization consisting primarily
of printing, postage, legal and consulting costs. All of the 1995 costs were
incurred in the second half of 1995.

(E) As of January 1, 1993, the Company adopted SFAS 106, pursuant to which the
cost of certain post-retirement benefits must be recognized on an accrual
basis as employees perform services to earn such benefits. The Company's
transition obligation as of January 1, 1993 amounted to approximately $3.2
million, net of income tax benefits, and was recorded as a cumulative effect
adjustment to net income.

(F) Represents a curtailment gain resulting from the freezing of the Company's
defined benefit pension plans as of December 31, 1995.

46
<PAGE>
RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1995

A summary of the Company's revenues follows:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------
1996 1995
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Insurance premiums
Traditional life insurance premiums......................................... $ 169,435 $ 163,857
Immediate annuity and supplementary contract premiums....................... 11,366 14,594
Other premiums.............................................................. 1,650 5,413
----------- -----------

Total insurance premiums.................................................. 182,451 183,864

Universal life product charges.............................................. 43,138 42,144
Annuity product charges..................................................... 654 417
----------- -----------

Total product charges..................................................... 43,792 42,561

Net investment income....................................................... 216,119 210,491
Realized gains (losses) on investments...................................... 62,625 41,564
Other revenues.............................................................. 2,280 2,285
----------- -----------

Total revenues............................................................ $ 507,267 $ 480,765
----------- -----------
----------- -----------
</TABLE>

Insurance premiums decreased $1.4 million to $182.5 million in the nine
months ended September 30, 1996 compared to $183.9 million in the nine months
ended September 30, 1995. Traditional life insurance premiums increased $5.6
million due to continued growth in renewal premiums. Immediate annuity deposits
and SUPPLEMENTARY CONTRACT premiums were $3.2 million lower in the nine months
ended September 30, 1996 compared to the nine months ended September 30, 1995
due to decreased immediate annuity sales. Other premiums were $3.8 million lower
in the nine months ended September 30, 1996 than in the nine months ended
September 30, 1995 primarily due to the Company's exit from several group life
and long-term disability reinsurance pools in the second half of 1995 and the
sale of the Company's remaining group life operation in the third quarter of
1996, as part of management's continuing review of insurance products'
profitability.

Universal life product charges were $1.0 million higher in the nine months
ended September 30, 1996 compared to the same period in 1995 primarily due to
increased COST OF INSURANCE charges as a result of the normal aging of that
block of business.

Net investment income increased by $5.6 million, or 2.7%, to $216.1 million
in the nine months ended September 30, 1996 as compared to $210.5 million in the
nine months ended September 30, 1995. The increase was attributable to an
increase in average invested assets. Average invested assets increased by $234.6
million to $3,900.3 million during the nine months ended September 30, 1996. The
effective yield on average invested assets was 7.85% in the nine months ended
September 30, 1996, compared to 7.87% in the same period of 1995. The decrease
in effective yield is due to lower bond yields in the first nine months of 1996
compared to the same period in 1995.

Realized gains on investments were $62.6 million in the nine months ended
September 30, 1996, compared to gains of $41.6 million in the nine months ended
September 30, 1995. The increase of $21.0

47
<PAGE>

million resulted primarily from increased sales of common stock, reflecting the
Company's decision to reduce its exposure to equity securities. Proceeds from
these sales were invested primarily in fixed maturity securities.

A summary of the Company's policyowner benefits follows:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------
1996 1995
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Traditional life insurance
Death benefits.................................................... $ 25,656 $ 24,356
Change in liability for future policy benefits and other policy
benefits......................................................... 117,849 112,935
----------- -----------

Total traditional life insurance benefits....................... 143,505 137,291

Universal life insurance
Death benefits in excess of cash value............................ 13,324 12,668
Interest credited to policyowner account balances................. 35,457 33,366
Other policy benefits............................................. 3,883 4,493
----------- -----------

Total universal life insurance benefits......................... 52,664 50,527

Annuities
Interest credited to deferred annuity account balances............ 52,142 59,123
Other annuity benefits............................................ 23,988 27,195
----------- -----------

Total annuity benefits.......................................... 76,130 86,318

Miscellaneous benefits.............................................. 1,658 5,546
----------- -----------

Total policyowner benefits...................................... $ 273,957 $ 279,682
----------- -----------
----------- -----------
</TABLE>

Total policyowner benefits decreased $5.7 million to $274.0 million in the
nine months ended September 30, 1996 as compared to the nine months ended
September 30, 1995. Traditional life benefits increased $6.2 million primarily
due to the growth in the amount of such business in force. Universal life
benefits increased by $2.1 million primarily due to increased interest credited
to policyowner account balances. While the weighted average crediting rate for
the Company's universal life liabilities decreased 16 basis points from 6.47% in
the nine months ended September 30, 1995 to 6.31% in the nine months ended
September 30, 1996, the Company's average liabilities increased $40.8 million
from the first nine months of 1995 to the first nine months of 1996, resulting
in the increased credited amounts in the 1996 period.

Annuity benefits decreased $10.2 million in the nine month period ended
September 30, 1996 to $76.1 million compared to $86.3 million in the nine months
ended September 30, 1995. Such benefits decreased due to reduced interest
credited to policyowner account balances and decreased other annuity benefits.
The weighted average crediting rate for the Company's individual deferred
annuity liabilities decreased 88 basis points to 5.39% in the nine months ended
September 30, 1996 compared to 6.27% in the nine months ended September 30,
1995. The Company's average deferred annuity liabilities decreased $60.6 million
from the first nine months of 1995 compared to the same period in 1996, also
contributing to the decrease in interest credited amounts in the 1996 period.
The decrease in other annuity benefits was the result of reduced immediate
annuity sales in 1996.

48
<PAGE>

The decrease in miscellaneous benefits of $3.9 million to $1.6 million in
the nine months ended September 30, 1996 compared to $5.5 million in the nine
months ended September 30, 1995 was primarily the result of the Company's exit
from several group life and long-term disability reinsurance pools in the second
half of 1995 and the sale of the Company's remaining group life operation in the
third quarter of 1996.

A summary of the Company's expenses follows:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
1996 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Commission expense, net of deferrals............................................. $ 6,843 $ 7,600
Other underwriting, acquisition and insurance expenses, net of deferrals......... 36,087 32,239
Amortization of deferred policy acquisition costs................................ 43,109 41,096
--------- ---------
Total expenses............................................................... $ 86,039 $ 80,935
--------- ---------
--------- ---------
</TABLE>

Commission expense, net of deferrals, decreased $0.8 million to $6.8 million
in the first nine months of 1996 compared to $7.6 million in the same period of
1995, primarily due to a decrease in gross commission expense as a result of
lower sales levels and the conversion of new annuity sales to the Ameritas Joint
Venture in May 1996. Other underwriting, acquisition and insurance expenses, net
of deferrals, increased by $3.9 million, or 11.9%, to $36.1 million in the nine
months ended September 30, 1996. The increase in expenses during the 1996 period
was primarily due to increased costs related to the Reorganization of $0.9
million, the Ameritas Joint Venture of $0.8 million, settlements and associated
legal fees of $0.5 million, and higher premium taxes of $0.7 million due to a
one-time adjustment to the amortization of the guaranty association asset.

The amortization of deferred policy acquisition costs increased by $2.0
million to $43.1 million in the nine months ended September 30, 1996 compared to
$41.1 million in the nine months ended September 30, 1995. The increase in
amortization in the 1996 period was primarily due to higher gross margins and
realized capital gains in the first nine months of 1996 compared to the same
period in 1995.

Dividends to policyowners increased by $4.4 million, or 12.1%, to $40.7
million in the first nine months of 1996 compared to $36.3 million in the first
nine months of 1995. The growth in dividends was primarily the result of the
growth and aging of the in-force policies. Traditional life reserves grew 7.9%
from September 30, 1995 to $1.18 billion at September 30, 1996. The weighted
average dividend rate credited to these policies was 7.16% for the nine months
ended September 30, 1996 compared to 7.14% for the same period in 1995.

Income before income taxes increased by $22.7 million in 1996, or 27.1%, to
$106.6 million in the nine months ended September 30, 1996 compared to $83.9
million in the nine months ended September 30, 1995. The increase resulted
primarily from the increase of $21.0 million in realized gains on investments.

Income tax expense increased by $10.5 million in the nine months ended
September 30, 1996 to $40.4 million compared to $29.9 million in the nine months
ended September 30, 1995. The increased income taxes for the nine month period
ended September 30, 1996 were the result of the higher pre-tax income due
primarily to the increased realized gains on investments and a $4.5 million
provision for the equity add-on tax in the first half of 1996 partially offset
by $1.7 million of tax credits. The effective income tax rate for the first nine
months of 1996 was 37.9% compared to 35.6% for the first nine months of 1995.

Net income increased by $12.2 million in the nine months ended September 30,
1996 to $66.2 million from $54.0 million in the nine months ended September 30,
1995. The increased net income resulted from higher pre-tax income due primarily
to the increased realized gains on investments.

49
<PAGE>
1995 COMPARED TO 1994

A summary of the Company's revenues follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1995 1994
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Insurance premiums
Traditional life insurance premiums......................................... $ 219,732 $ 209,447
Immediate annuity and supplementary contract premiums....................... 17,659 16,680
Other premiums.............................................................. 6,696 11,785
----------- -----------

Total insurance premiums.................................................. 244,087 237,912
Universal life product charges.............................................. 56,763 55,815
Annuity product charges..................................................... 607 547
----------- -----------

Total product charges..................................................... 57,370 56,362
Net investment income....................................................... 285,244 275,691
Realized gains (losses) on investments...................................... 51,387 (19,930)
Other revenues.............................................................. 5,390 2,391
----------- -----------

Total revenues............................................................ $ 643,478 $ 552,426
----------- -----------
----------- -----------
</TABLE>

Insurance premiums increased $6.2 million to $244.1 million in 1995 compared
to $237.9 million in 1994. Traditional life insurance premiums increased $10.3
million as a result of continued growth in renewal premiums. Immediate annuity
deposits and supplementary contract premiums were $1.0 million greater in 1995
than 1994 due to increased immediate annuity sales. Other premiums were $5.1
million lower in 1995 than in 1994 primarily due to the Company's exit from
several group life and long-term disability reinsurance pools in 1995, as part
of management's continuing review of insurance products' profitability.

Universal life product charges were $0.9 million higher in 1995 compared to
1994 primarily due to increased cost of insurance charges as a result of the
normal aging of that block of business.

Net investment income increased by $9.5 million, or 3.5%, to $285.2 million
in 1995 as compared to $275.7 million in 1994. The increase was attributable to
an increase in average invested assets partially offset by a decline in the
effective yield on average invested assets. Average invested assets increased by
$162.9 million to $3,728.4 million during 1995. The effective yield on average
invested assets decreased from 7.90% in 1994 to 7.84% in 1995 reflecting a
reduction in interest income on both bonds and commercial mortgages as a result
of lower market interest rates on new investments.

Realized gains on investments were $51.4 million in 1995 compared to
realized losses of $19.9 million in 1994. The increase of $71.3 million in 1995
resulted primarily from the combination of increased gains of $32.5 million over
1994 amounts from the sale of common stock and a gain of $9.4 million in 1995
compared to a loss of $25.5 million in 1994 from sales of fixed maturity
securities. Of the losses incurred in 1994, $21.1 million were incurred in
connection with sales of fixed maturity securities which resulted from a planned
investment strategy that maximized the after-tax proceeds from the sale of
selected fixed maturity securities. The sales of common stock in 1995 were a
direct result of the Company's decision to reduce the level of equity securities
as a percentage of its investment portfolio on a long-term basis.

50
<PAGE>
Other revenues increased in 1995 by $3.0 million from 1994 levels, primarily
due to a gain of $3.1 million which resulted from the curtailment of the
Company's defined benefit pension plans, effective December 31, 1995. See Note 7
to the Consolidated Financial Statements.

A summary of the Company's policyowner benefits follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1995 1994
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Traditional life insurance
Death benefits.............................................................. $ 32,196 $ 30,044
Change in liability for future policy benefits and other policy benefits.... 152,742 149,283
----------- -----------

Total traditional life insurance benefits................................. 184,938 179,327

Universal life insurance
Death benefits in excess of cash value...................................... 17,098 15,165
Interest credited to policyowner account balances........................... 45,240 42,095
Other policy benefits....................................................... 5,214 7,237
----------- -----------

Total universal life insurance benefits................................... 67,552 64,497

Annuities
Interest credited to deferred annuity account balances...................... 78,120 77,980
Other annuity benefits...................................................... 35,582 34,918
----------- -----------

Total annuity benefits.................................................... 113,702 112,898

Miscellaneous benefits........................................................ 8,428 13,174
----------- -----------

Total policyowner benefits................................................ $ 374,620 $ 369,896
----------- -----------
----------- -----------
</TABLE>

Total policyowner benefits increased $4.7 million from 1994 to $374.6
million in 1995. Traditional life benefits increased $5.6 million due primarily
to increased mortality costs and increased liabilities for future policy
benefits, in each case associated with the growth in the amount of such business
in force. Universal life benefits increased $3.1 million primarily due to
increased interest credited to policyowner account balances. The weighted
average crediting rate for the Company's universal life liabilities increased 23
basis points from 6.44% in 1994 to 6.67% in 1995, and the Company's average
liabilities increased $41.9 million, or 5.8%, from 1994 to 1995, resulting in
the increased credited amounts in 1995.

Annuity benefits increased $0.8 million in 1995 to $113.7 million compared
to $112.9 million in 1994. Such benefits increased due to increased interest
credited to policyowner account balances and increased other annuity benefits.
While the weighted average crediting rate for the Company's individual deferred
annuity liabilities decreased 25 basis points to 6.16% in 1995 compared to 6.41%
in 1994, the Company's average liabilities increased $32.1 million, or 2.5%,
from 1994 to 1995, resulting in the increased interest credited amounts in 1995.
The increased other annuity benefits were the result of continued growth in the
immediate annuity and supplementary contract business in force.

The decrease in miscellaneous benefits of $4.8 million to $8.4 million in
1995 compared to $13.2 million in 1994 was primarily the result of the Company's
exit from several group life and long-term disability reinsurance pools in 1995.

51
<PAGE>
A summary of the Company's expenses follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1995 1994
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Commission expense, net of deferrals.......................................... $ 10,448 $ 9,451
Other underwriting, acquisition and insurance expenses, net of deferrals...... 48,207 59,153
Amortization of deferred policy acquisition costs............................. 50,239 42,756
----------- -----------
Total expenses............................................................ $ 108,894 $ 111,360
----------- -----------
----------- -----------
</TABLE>

Commission expense, net of deferrals, increased $1.0 million, or 10.5%, in
1995 to $10.4 million, primarily as a result of the integration of the product
lines of Central Life and Old AML and an increase in gross commissions of $3.0
million as a result of increased annuity sales in 1995. Other underwriting,
acquisition and insurance expenses, net of deferrals, decreased in 1995 by $10.9
million, or 18.5%, to $48.2 million. 1995 was the first year of the consolidated
operations of Central Life and Old AML. As a result of the combination,
approximately $7.8 million of cost reductions were realized in 1995 from 1994
combined levels, excluding the merger-related expenses described below. These
reductions in 1995 were partially offset by increased legal and settlement costs
of $1.1 million, higher incentive compensation of $1.0 million and $2.2 million
of expenses related to the investigation and review of alternative capital
structures, including implementing the Reorganization. Included in 1994 expenses
were approximately $10.0 million of expenses related to the merger of the two
companies compared to $2.2 million of merger-related costs in 1995.

The amortization of deferred policy acquisition costs increased by $7.4
million to $50.2 million in 1995 compared to $42.8 million in 1994. The increase
in amortization in 1995 was primarily due to higher realized gains and gross
profits in 1995 than in 1994.

Dividends to policyowners increased by $4.4 million, or 9.7%, to $49.4
million in 1995 compared to $45.0 million in 1994. The growth in dividends was
primarily the result of the growth and aging of the in-force policies.
Traditional life reserves grew 8.4% from 1994 to $1.12 billion in 1995. The
weighted average dividend rate credited to these policies was 7.14% for 1995 and
1994.

Income before income taxes increased by $84.4 million, or 323%, to $110.5
million in 1995 compared to $26.1 million in 1994. The increase resulted
primarily from the $9.5 million increase in net investment income, net realized
gains on investments of $51.4 million in 1995 as compared to net realized losses
on investments of $19.9 million in 1994, and reduced expenses, partially offset
by higher dividends to policyowners.

Income tax expense increased by $21.7 million to $41.2 million in 1995 as
compared to $19.5 million in 1994. The increased 1995 income taxes were the
result of the higher pre-tax income discussed above. The effective income tax
rate for 1995 was 37.3% and for 1994 was 74.5%. In 1994, American Mutual Life
was subject to the equity add-on tax which resulted in an additional $9.6
million of current income tax expense.

Net income increased by $62.8 million in 1995 to $69.4 million from $6.6
million in 1994. This increase resulted from the increases in pre-tax income
discussed above.

52
<PAGE>
1994 COMPARED TO 1993

A summary of the Company's revenues follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1994 1993
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Insurance premiums
Traditional life insurance premiums......................................... $ 209,447 $ 198,079
Immediate annuity and supplementary contract premiums....................... 16,680 16,737
Other premiums.............................................................. 11,785 11,544
----------- -----------

Total insurance premiums.................................................. 237,912 226,360

Universal life product charges.............................................. 55,815 56,928
Annuity product charges..................................................... 547 545
----------- -----------

Total product charges..................................................... 56,362 57,473

Net investment income....................................................... 275,691 269,854
Realized gains (losses) on investments...................................... (19,930) 15,460
Other revenues.............................................................. 2,391 2,498
----------- -----------

Total revenues............................................................ $ 552,426 $ 571,645
----------- -----------
----------- -----------
</TABLE>

Insurance premiums increased $11.5 million to $237.9 million in 1994
compared to $226.4 million in 1993. Traditional life insurance premiums
increased $11.4 million primarily as a result of continued growth in renewal
premiums.

Universal life product charges were $1.1 million lower in 1994 than in 1993
primarily due to a decrease in cost of insurance charges by the Company in its
universal life product line in 1994.

Net investment income increased by $5.8 million, or 2.2%, to $275.7 million
in 1994 as compared to $269.9 million in 1993. The increase was attributable to
an increase in average invested assets partially offset by a decline in the
effective yield on average invested assets. Average invested assets increased by
$108.5 million to $3,565.5 million during 1994. The effective yield on average
invested assets decreased from 8.08% in 1993 to 7.90% in 1994, primarily
reflecting lower reinvestment rates in late 1993 and throughout 1994.

Realized losses on investments were $19.9 million in 1994 compared to gains
of $15.5 million in 1993. The realized losses in 1994 resulted in part from a
planned investment strategy to increase after-tax investment yields in future
periods by disposing of selected fixed maturity securities that generated losses
of $21.1 million in 1994.

53
<PAGE>
A summary of the Company's policyowner benefits follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1994 1993
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Traditional life insurance
Death benefits.............................................................. $ 30,044 $ 28,516
Change in liability for future policy benefits and other policy benefits.... 149,283 143,659
----------- -----------

Total traditional life insurance benefits................................. 179,327 172,175

Universal life insurance
Death benefits in excess of cash value...................................... 15,165 13,270
Interest credited to policyowner account balances........................... 42,095 40,060
Other policy benefits....................................................... 7,237 7,007
----------- -----------

Total universal life insurance benefits................................... 64,497 60,337

Annuities
Interest credited to deferred annuity account balances...................... 77,980 82,314
Other annuity benefits...................................................... 34,918 38,001
----------- -----------

Total annuity benefits.................................................... 112,898 120,315

Miscellaneous benefits........................................................ 13,174 11,446
----------- -----------

Total policyowner benefits................................................ $ 369,896 $ 364,273
----------- -----------
----------- -----------
</TABLE>

Total policyowner benefits increased by $5.6 million from 1993 to $369.9
million in 1994. Traditional life benefits increased $7.2 million primarily due
to increased mortality costs and increased liabilities for future policy
benefits, in each case associated with the growth in the amount of such business
in force. Universal life benefits increased $4.2 million due to increased
mortality costs and increased interest credited to policyowner account balances
resulting from the growth in the amount of such business in force. While the
weighted average crediting rate for the Company's universal life liabilities
decreased 15 basis points from 6.59% in 1993 to 6.44% in 1994, the Company's
average liabilities increased $43.8 million, or 6.5%, from 1993 to 1994,
resulting in the increased credited amounts in 1994.

Annuity benefits decreased $7.4 million in 1994 to $112.9 million compared
to $120.3 million in 1993. Such benefits decreased due to reduced interest
credited to policyowner account balances and decreased other annuity benefits.
While the Company's average annuity liabilities increased $88.2 million or 7.4%
for these products from 1993 to 1994, this was more than offset by the reduction
in the weighted average crediting rate on these products of 54 basis points from
6.95% in 1993 to 6.41% in 1994, resulting in the decreased interest credited
amounts in 1994. The decrease in other annuity benefits was the result of a
change in valuation basis on structured settlement contracts which increased
reserves in 1993, partially offset by the growth of immediate annuity and
supplementary contract business in force in 1994.

The increase in miscellaneous benefits of $1.7 million was primarily due to
a reduction of reserves in the Company's group accident and health business in
1993.

54
<PAGE>
A summary of the Company's expenses follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1994 1993
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Commission expense, net of deferrals.......................................... $ 9,451 $ 9,239
Other underwriting, acquisition and insurance expenses, net of deferrals...... 59,153 49,398
Amortization of deferred policy acquisition costs............................. 42,756 47,441
----------- -----------
Total expenses............................................................ $ 111,360 $ 106,078
----------- -----------
----------- -----------
</TABLE>

Commission expense, net of deferrals, increased $0.2 million to $9.4 million
in 1994 as compared to $9.2 million in 1993. Other underwriting, acquisition and
insurance expenses, net of deferrals, increased in 1994 by $9.8 million, or
19.7%, to $59.2 million, primarily due to approximately $10.0 million of merger-
related expenses incurred in 1994 in connection with the merger of Central Life
and Old AML.

The amortization of deferred policy acquisition costs decreased by $4.6
million in 1994 to $42.8 million compared to $47.4 million in 1993. The change
in amortization was primarily the result of the combination of decreased
amortization due to realized losses in 1994 and higher amortization in 1993 due
to changes in assumptions as to future profitability resulting from an expected
decrease in cost of insurance charges in the universal life product line, net of
an expected improvement in mortality experience.

Dividends to policyowners decreased by $0.5 million, or 1.1% to $45.0
million in 1994 compared to $45.5 million in 1993. The decrease in dividends was
primarily the result of a dividend scale reduction in 1994. The weighted average
dividend rate credited to these policies was 7.14% in 1994 compared to 7.34% in
1993. Traditional life reserves grew 9.3% from 1993 to $1.03 billion in 1994.

Income before income taxes and before the cumulative effect of a change in
accounting principles decreased by $29.7 million, or 53.1%, to $26.1 million in
1994 compared to $55.8 million in 1993. The decrease resulted primarily from net
realized losses on investments of $19.9 million in 1994 as compared to $15.5
million in net realized gains on investments in 1993 and an increase of $9.8
million in underwriting, acquisition and insurance expenses, net of deferrals,
partially offset by higher net investment income, lower amortization of deferred
policy acquisition costs and lower crediting rates on all product lines.

Income tax expense decreased by $1.9 million from 1993 to 1994. The
decreased 1994 income taxes were the result of the lower pre-tax income
discussed above, partially offset by the equity add-on tax in 1994. The
effective income tax rate for 1994, adjusted for the equity add-on tax, was
identical to the 1993 rate of 38%. In 1994, American Mutual Life was subject to
the equity add-on tax which resulted in an additional $9.6 million of current
income tax expense. The 1993 equity add-on tax was zero.

As of January 1, 1993, the Company adopted SFAS 106, pursuant to which the
cost of certain post-retirement benefits must be recognized on an accrual basis
as employees perform services to earn such benefits. The Company's transition
obligation as of January 1, 1993 amounted to approximately $3.2 million, net of
income tax benefits, and was recorded as a cumulative effect adjustment to net
income.

Net income decreased by $24.6 million in 1994 to $6.6 million compared to
$31.2 million in 1993. The primary reasons for the decrease were investment
losses, merger-related costs and the equity add-on tax in 1994.

LIQUIDITY AND CAPITAL RESOURCES

THE COMPANY

The Company's cash flow from operations will consist of dividends from
subsidiaries, if declared and paid, interest income on loans and advances to its
subsidiaries (including a surplus note issued to

55
<PAGE>
the Company by AmerUs Life), investment income on assets held by the Company and
fees which the Company will charge AmerUs Group, AmerUs Life and certain other
of its affiliates for management 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
AmerUs Life to make any dividend payments to its shareholders. The payment of
dividends by AmerUs Life to the Company is regulated under Iowa law. Under Iowa
law, AmerUs Life may pay dividends only from the earned surplus arising from its
business and must receive the prior approval of the Iowa Commissioner to pay a
dividend, if such dividend would exceed certain statutory limitations. The
current statutory limitation is the greater of (i) 10% of AmerUs Life's capital
and surplus as of the preceding year end or (ii) the net gain from operations
for the previous calendar year. Iowa law gives the Iowa Commissioner broad
discretion to disapprove requests for dividends in excess of these limits.
During 1996, the maximum amount that would have been legally available for
distribution to the Company, absent the Distribution, without further regulatory
approval would have been approximately $40 million. However, as a result of the
Distribution, AmerUs Life will not be able to pay dividends to the Company in
the 12-month period following the Distribution without the prior consent of the
Iowa Commissioner. See "Supervision and Regulation." However, at September 30,
1996, the Company, also has the ability to borrow up to approximately $120
million from AmerUs Life without prior regulatory approval.

On November 12, 1996, the Company established the Bank Credit Facility,
which is comprised of $100 million in term debt and $75 million under a
revolving line of credit. Immediately after establishing the Bank Credit
Facility the Company borrowed $100 million under the term debt component of the
facility and $75 million under the revolving line of credit. The Company
contributed $125 million of the borrowings under the Bank Credit Facility to
AmerUs Life and used $50 million to purchase a 9% surplus note, due December 1,
2006, from AmerUs Life. Proceeds of the Offerings and the Preferred Offering
will be used to repay borrowings outstanding under the Bank Credit Facility.
Following such repayment, the Company would have significant borrowing capacity
under its revolving line of credit.

The Company may from time to time review potential acquisition
opportunities. The Company anticipates that funding for any such acquisition may
be provided from available cash resources or from debt or equity financing. As
of September 30, 1996 the Company had no material commitments for capital
expenditures.

AMERUS LIFE

AmerUs Life's cash inflows 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,
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 inflows 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 AmerUs Life's anticipated
short-term cash obligations.

AmerUs Life generated cash flows from operating activities of $83.0 million,
$202.0 million, $172.4 million and $173.6 million, for the nine months ended
September 30, 1996 and for the years ended December 31, 1995, 1994 and 1993,
respectively. Excess operating cash flows were primarily

56
<PAGE>

used to increase AmerUs Life's fixed maturity investment portfolio consistent
with the long-term investment objective of the Company to reduce the level of
equity investments and mortgages as a percentage of its investment portfolio.

In November 1994, the Company securitized and sold a pool of commercial
mortgage loans with an approximate aggregate principal balance of $158 million.
The Company converted the loans to cash and reinvested the proceeds in fixed
maturity investments which afforded the Company more liquidity and higher
overall credit quality, and reduced its exposure to mortgages in accordance with
its long-term investment objectives.

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. AmerUs Life continuously monitors benefits
and surrenders to provide projections of future cash requirements. As part of
this monitoring process, AmerUs Life performs cash flow testing of its assets
and liabilities under various scenarios to evaluate the adequacy of reserves. In
developing its investment strategy, AmerUs Life 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 AmerUs Life's claims-paying and
financial strength ratings. See "Risk Factors--Exposure to Withdrawals and
Surrenders."

AmerUs Life takes into account asset-liability management considerations.
Contract terms for AmerUs Life'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
statutory liabilities for interest-sensitive life products and annuities by
their contractual withdrawal provisions at December 31, 1995 (dollars in
millions):

<TABLE>
<S> <C> <C>
Not subject to discretionary withdrawal..................... $ 231
Subject to discretionary withdrawal with adjustments:
Specified surrender charges (A)........................... 867
Market value adjustments.................................. 413
---------
Subtotal................................................ 1,280
Subject to discretionary withdrawal without adjustments..... 716
---------
Total................................................... $ 2,227
---------
---------
</TABLE>

- --------------
(A) Includes $255 million of statutory liabilities with a contractual surrender
charge of less than five percent of the account balance.

Through its membership in the Federal Home Loan Bank of Des Moines, AmerUs
Life is eligible to borrow on a line of credit available to provide it
additional liquidity. The line of credit, the amount of which is re-set
annually, is based on the amount of capital stock of the Federal Home Loan Bank
of Des Moines owned by AmerUs Life, which supported a borrowing capacity of $70
million as of December 31, 1995. Interest is payable at a current rate at the
time of any advance. As of September 30, 1996, AmerUs Life had a $25 million
open secured line of credit against which $24.7 million had been borrowed.

AmerUs Life may also obtain liquidity through sales of investments or
borrowings collateralized by its investment portfolio. AmerUs Life's investment
portfolio as of September 30, 1996 had a carrying value of $3.8 billion. As of
September 30, 1996, fixed maturity securities were $3.1 billion, or 81.9%, of

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<PAGE>

invested assets, with public and private fixed maturity securities constituting
$2.8 billion, or 88.1%, and $373.8 million, or 11.9%, of total fixed maturity
securities, respectively. See "Business--Investment Portfolio."

The statutory surplus of AmerUs Life will be impacted by the Distribution,
the Capital Contribution and the Company's simultaneous capital contribution to
AmerUs Life and purchase of a surplus note issued by AmerUs Life. At September
30, 1996, the pro forma statutory surplus of AmerUs Life was approximately $258
million after giving effect to the above transactions compared to the actual
statutory surplus of $289 at September 30, 1996. The Company believes that this
level of statutory capital is more than adequate as the Company's risk-based
capital is significantly in excess of required levels. See "Supervision and
Regulation--Regulation of AmerUs Life." In contrast, the pro forma GAAP
shareholders' equity of AmerUs Life at September 30, 1996 was approximately $437
million. The major difference between statutory and GAAP accounting relates to
the accounting for policy acquisition costs. For statutory purposes, these costs
are expensed when incurred, while for GAAP these costs are capitalized and
amortized in the future to better match revenues and expenses. At September 30,
1996, deferred policy acquisition costs were $320 million which accounted for
approximately $208 million of the after-tax difference between statutory and
GAAP equity.

In the future, in addition to cash flows from operations and AmerUs Life's
borrowing capacity, AmerUs Life would anticipate obtaining its required capital
from the Company as the Company will have access to the public markets.

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 flexible responses to interest rate changes
as part of the Company's management of interest spreads. However, the
profitability of the Company's products is not based solely upon interest rate
spreads but also on persistency, mortality and expenses.

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

Although all of its assets support all of its liabilities, 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.

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<PAGE>
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 does invest in collateralized mortgage obligations 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

For periods prior to the Offerings, the Company and its subsidiaries filed
as part of a consolidated United States federal income tax return with AMHC and
its subsidiaries. For periods after the Offerings, the Company and its
subsidiaries will not file as part of a consolidated United States federal
income tax return with AMHC. Further, the Company and its subsidiary AmerUs Life
will not be eligible to file a consolidated United States federal income tax
return for five years.

EMERGING ACCOUNTING MATTERS

SFAS NO. 121

In March 1995, the Financial Accounting Standards Board issued SFAS No. 121,
"Accounting for the Impairment of Long Lived Assets and Long Lived Assets to be
Disposed of." This standard establishes criteria for the identification and
recognition of the impairment of certain assets to be held and used in an
entity's business. The statement does not apply to financial instruments,
deferred income tax assets or intangibles such as deferred policy acquisition
costs and value of insurance IN FORCE acquired. It does, however, apply to
assets such as property and equipment and related goodwill. SFAS No. 121 is
effective for the Company's financial statements after December 31, 1995. While
certain of the Company's assets are subject to the provisions of SFAS No. 121,
management believes the standard will have no material effect on the Company's
consolidated financial statements.

SFAS NO. 125

In June 1996, the FASB issued Statement No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities." SFAS No.
125 provides consistent accounting standards for securitizations and other
transfers of financial assets, determines when financial assets (liabilities)
should be considered sold (settled) and removed from the balance sheet, and
determines when related revenues and expenses should be recognized. FASB
Statement No. 125 is effective for transfers and servicing of financial assets
and extinguishments of liabilities occurring after December 31, 1996. This
statement will be applicable to the Company, however, management believes that
it will have no material effect on the Company's consolidated financial
statements.

STATUTORY ACCOUNTING CODIFICATION

The NAIC currently is in the process of codifying statutory accounting
practices, the result of which is expected to constitute the only source of
"prescribed" statutory accounting practices. Accordingly, that project, which is
not expected to be completed before the end of 1997, will likely change certain
statutory accounting practices. The codification may result in changes to the
permitted or prescribed accounting practices that the Company's insurance
subsidiaries use to prepare their statutory-basis financial statements.

59
<PAGE>
BUSINESS

GENERAL

The Company is engaged in the business of marketing, underwriting and
distributing a broad range of individual life insurance and annuity products to
individuals and businesses in 45 states and the District of Columbia. The
Company's primary product offerings consist of whole life, universal life and
term life insurance policies and fixed annuities. In addition, on April 1, 1996
the Company acquired a 34% interest in a variable life insurance and annuity
company through a joint venture arrangement (the "Ameritas Joint Venture") with
Ameritas Life Insurance Corp. ("Ameritas"). The Company's distribution systems
now market fixed annuities issued by AVLIC and have begun to sell AVLIC's
variable life insurance and variable annuity products. Based on published
comparisions and rankings of life insurance and annuity products, the Company
believes that its products have a history of being competitive within the
industry.

The Company's subsidiary, AmerUs Life, was originally incorporated in 1896
as a mutual insurance company under the name Central Life Assurance Society of
the United States. Its name was changed to American Mutual Life Insurance
Company in 1994 following the merger of Old AML into Central Life. On June 30,
1996, American Mutual Life was converted into a stock life insurance company
pursuant to the Plan and its name was changed to AmerUs Life. As of September
30, 1996, AmerUs Life had approximately 418,000 life insurance policies and
annuity contracts outstanding and individual life insurance in force, net of
reinsurance, of approximately $26.1 billion. As of September 30, 1996, the
Company had total assets of $4.3 billion and total shareholders' equity of $437
million (prior to the Offerings, after giving effect to the Capital
Contribution).

The Company's target markets are individuals in the middle and upper income
brackets and small businesses. Its geographic focus is national in scope (except
for Connecticut, Maine, New Hampshire, New York and Vermont, in which the
Company is not licensed to do business), and it primarily serves suburban and
rural areas. The Company distributes its products primarily through a
combination of career general agency and personal producing general agency
("PPGA") distribution systems, as well as a network of independent brokers. The
career general agency system consists of a network of 33 career general
agencies, with approximately 550 career agents. The PPGA system is comprised of
approximately 425 PPGAs, with approximately 950 agents. Variable life insurance
products and the fixed and variable annuities offered by the Ameritas Joint
Venture are marketed through the Company's distribution systems and the
distribution systems of Ameritas and AVLIC, which consist of approximately 250
agents and 450 independent broker-dealers (with approximately 7,500 registered
representatives), respectively.

The pricing of the Company's products is generally determined by reference
to actuarial calculations and statistical assumptions principally relating to
mortality, persistency, investment yield assumptions, estimates of expenses and
management's judgment as to market and competitive conditions. The premiums and
deposits received, together with assumed investment earnings, are designed to
cover policy benefits, expenses and policyowner dividends plus return a profit
to the Company. These profits arise from the margin between mortality charges
and insurance benefits paid, the margin between actual investment results and
the investment income credited to policies (either directly or through dividends
to policyowners) and the margin between expense charges and actual expenses. The
level of profits also depends on persistency because business acquisition costs,
particularly agent commissions, are recovered over the life of the policy.
Dividends and interest credited on policies (including policies included in the
Closed Block) may vary from time to time reflecting changes in investment,
mortality, persistency, expenses and other factors. Interest rate fluctuations
have an effect on investment income and may have an impact on policyowner
behavior. Increased lapses in policies may be experienced if the Company does
not maintain interest rates and dividend scales that are competitive with other
products in the marketplace.

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<PAGE>

AmerUs Life's claims-paying ability is rated "AA-" (Very high) by Duff &
Phelps and "A" (Good) by Standard & Poor's. AmerUs Life is rated "A" (Excellent)
by A.M. Best and "A2" (Good) by Moody's. See "Risk Factors--Importance of
Ratings."

BUSINESS STRATEGY

The Company's business strategy to achieve earnings growth and increase
shareholder value is focused on managing certain operating fundamentals where
the Company's results have historically compared favorably to the industry. The
Company intends to utilize these operating strengths to differentiate its
products by maintaining its position and reputation as a low-cost producer that
provides high-value products to its life insurance and annuity customers, while
also providing superior service to both agents and customers. The Company
believes it is well positioned to compete effectively based upon a number of
strengths including its strong operating performance, customer-driven product
offerings, productive and diversified distribution systems, sophisticated
asset/liability management capabilities and a customer service orientation. In
addition, the Company intends to continue to seek new business opportunities
through mergers, acquisitions and strategic alliances.

FACTORS AFFECTING OPERATING PERFORMANCE

The Company believes that its operating performance is significantly
impacted by four basic elements: (i) mortality, (ii) persistency, (iii)
operating expenses, and (iv) investment yield. The Company believes that its
results for each of these four basic elements for the last several years have
been strong.

The Company believes its conservative risk selection practices, its
disciplined field underwriting and its focus on maintaining a suburban and rural
customer base have resulted in the Company realizing favorable mortality
experience for the last several years. See "--Insurance Underwriting." The
Company fully underwrites each application and has no group underwriting or
guaranteed issue business.

The Company has consistently achieved favorable persistency on its life
insurance products (i.e., lower lapse rates). See "--Products." This has
resulted in a high level of renewal premiums and, as a result, a larger revenue
base over which to amortize acquisition costs. This high persistency has been
achieved by providing incentives to agents by, among other things, grading
production bonuses by actual persistency, paying persistency bonuses, awarding
recognition for both career agency and career agent persistency achievements,
and monitoring agency persistency on a monthly basis. Also, the Company believes
that its favorable career agent retention rate has contributed to the high
persistency rates it has achieved.

The Company has aggressively managed its cost structure, reducing general
insurance expenses by $7.8 million, or 16.6%, in 1995 compared to 1994
(excluding certain non-recurring expenses). This reduction reflects, among other
things, efficiencies realized from reduced personnel and data processing costs
as a result of the merger of Old AML into Central Life at the beginning of 1995.
Additional cost reductions are expected to be realized as product lines of the
two companies are further integrated and the technology applications of Central
Life are applied to all of the Old AML business. Other factors contributing to
the Company's lower cost structure include: (i) a flat organizational structure
which allows the Company to be responsive to changing business conditions; (ii)
the location of the Company in a geographic area which provides lower cost
operations than found in many other areas of the country; (iii) a well-trained,
experienced workforce; and (iv) efficient use of technology.

The Company's distribution systems are compensated almost entirely on a
variable-cost basis, which provides flexibility in managing distribution costs
and has allowed the Company to maintain acquisition costs which management
believes are satisfactory. The Company also focuses on reducing acquisition
costs. For example, the Company reduced life insurance acquisition costs in its
career general agency system by approximately 9% from 1992 through 1995.

The Company has maintained competitive portfolio yields, while at the same
time substantially reducing exposure to higher risk assets such as mortgages and
real estate over the last several years. As of September 30, 1996, mortgages
were 6.8% of invested assets and real estate acquired in foreclosure was 0.5% At
the same time, overall credit quality of invested assets has been substantially
improved.

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<PAGE>
These results have been achieved in part by a more systematic and sophisticated
investment strategy, recruitment and development of experienced investment
professionals, enhanced systems technology and reduced investment expenses.
Attractive risk-adjusted yields on its investments have enabled the Company to
offer competitive pricing on its products and to attract and retain business,
while maintaining the Company's profitability.

COMPETITIVE PRODUCT OFFERINGS WHICH MEET DEMANDS OF CUSTOMERS

The Company's business strategy emphasizes the development of products which
meet the demands of its customers. Based on published comparisons and rankings
of life insurance and annuity products, the Company believes that its products
have a long history of being very competitive within the industry. The Company's
participating whole life insurance products have consistently ranked among the
top ten based on 10 and 20 year interest adjusted surrender cost indices, and
its universal life insurance products have consistently ranked among the top
quartile based on 5 and 10 year cash values. The Company's fixed annuity
products are also highly competitive in the industry, having ranked among the
top ten in surveys measuring account and cash values of single premium deferred
annuity products. See "--Products."

The Company continuously monitors the marketplace to identify and develop
new products and improve existing products. For example, in 1989, the Company
introduced a life insurance product which combined permanent whole life
insurance, increasing paid-up additions and decreasing term life insurance.
These flexible life insurance products can be tailored to meet the life
insurance needs of the customer at a premium level which is attractive to the
customer. These products were substantially enhanced with additional features in
1994, and generated over 20% of total new annualized life premiums in 1995.

Recent product development activity has been done on an integrated basis,
using a team approach involving the Company's distribution, investment and
asset/liability management units. In 1993, the Company used this approach, which
takes into account acceptable risk levels, to develop a new series of deferred
annuities with more attractive features and pricing. These new products were
substantially responsible for an increase in annuity sales from $57.2 million in
1992 to $191.5 million in 1995. In 1996, the Company's distribution systems
began offering, through the Ameritas Joint Venture, variable life insurance and
variable annuities issued by AVLIC. These products enable the policyowner to
share in the investment experience of a SEPARATE ACCOUNT. These additional
products expand the product portfolio available to producers in the career
general agency and PPGA systems and provide the Company with immediate access to
one of the fastest-growing business segments within the life insurance and
annuity business.

The Company also continuously reviews its product lines to eliminate low
volume products and augment its existing products to increase sales of such
products. In addition, the Company regularly reviews the pricing of its
products. Where the Company has decided not to manufacture a line of products it
has made arrangements in selected cases to sell products of other companies.
This practice provides producers with a broader line of competitive products
while enabling the Company to focus on its core lines of business.

PRODUCTIVE AND DIVERSIFIED DISTRIBUTION SYSTEMS

One of the Company's strategies for growth is to make its distribution
systems more productive and diversified. Prior to the merger of Old AML into
Central Life, the Company's distribution system consisted primarily of its
career general agency system. With the merger, the Company added the PPGA
distribution system of Old AML. The Company successfully rationalized the
overlapping career general agency distribution system and the PPGA distribution
system, leaving existing agencies and agents in place in their existing systems
and dividing the country along geographic lines for new recruiting of career
general agencies and PPGAs. The Ameritas Joint Venture provides access to a
network of approximately 450 independent broker/dealers (with approximately
7,500 registered representatives) and the Ameritas agency distribution systems.
Agents in the Company's distribution systems may sell competitors' products.
However, agents in both the career general agency and the PPGA system are given
financial incentives based on the volume of their sales of the Company's
products.

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The Company has recently added two additional regional vice presidents to
strengthen its distribution systems management and increase recruiting of new
general agents and agents. The Company believes it will be able to recruit both
inexperienced and experienced producers by providing a broad range of
competitive products, including the newly added variable life insurance and
variable annuity products, and by offering strong marketing and administrative
support services and competitive compensation. The Company's variable cost-based
compensation systems, which include bonus opportunities based on production and
persistency, are designed to attract and reward producers who sell increasing
amounts of persisting business.

SOPHISTICATED ASSET/LIABILITY MANAGEMENT

The Company has developed a sophisticated approach to asset/liability
management. The investment unit and the asset/liability management unit work
together closely to identify investments which provide maximum returns
consistent with acceptable risk levels and liability durations. The asset
portfolio is segmented by liability type, with tailored investment strategies
for specific product lines. The Company has the ability to continuously model
the actual results of its investment portfolio against expected results in order
to identify changing market conditions early and, where appropriate, exit
existing investments and shift to new investments which better meet the
Company's investment objectives.

CUSTOMER SERVICE ORIENTATION

As part of a strategy to provide better service to agents and customers, the
Company continues to invest in advanced customer service systems and technology
to support these functions. In addition to improving the level of service, these
investments have also reduced administration costs. The Company developed and
installed an imaging system in its new business processing unit in 1991 and is
currently developing and installing a second generation imaging system in both
the new business and in force business units. During the past five years,
numerous enhancements have been added to the original imaging system to
facilitate more efficient and accurate processing of new business. The new
imaging system will incorporate all of these and additional enhancements
developed from the experience gained in using the original system. The immediate
on-line availability to any service representative of policy-related
correspondence and documents enables the Company to provide fast, comprehensive
service to inquiries by policyowners and agents. Along with easy access to data,
work flow and other management tools provided by the system have resulted in
improved productivity.

MERGERS, ACQUISITIONS AND STRATEGIC ALLIANCES

Consistent with increased merger and acquisition activity in the life
insurance industry, management believes that mergers, acquisitions and strategic
alliances will be necessary to more fully utilize the Company's distribution and
administrative capacity and to obtain improved economies of scale and a lower
cost structure.

The mutual holding company structure provides the Company with access to the
capital markets, thereby enhancing the Company's ability to pursue acquisitions.
Based on the Company's success in identifying and effectively implementing
mergers, acquisitions and strategic alliances, management intends to actively
and selectively participate in such transactions in the future as a means to
further enhance shareholder value.

The Company has historically pursued mergers, acquisitions and strategic
alliances with the goals of improving its position in existing market segments
or entering desirable new market segments. Notable recent activities include the
combination by merger of Old AML into Central Life in 1994, and the Ameritas
Joint Venture which was completed in April, 1996. As part of the merger of Old
AML into Central Life in December, 1994, management was able to: (i)
substantially integrate the administrative operations of the two companies
within a four-month period in late 1994 and achieve a $7.8 million, or 16.6%,
expense reduction (excluding certain non-recurring expenses) in 1995 with
minimal disruption to policyowners and agents and without a reduction in the
quality or quantity of services offered; (ii) successfully rationalize the
different distribution systems existing after the merger with no loss of
production; and

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(iii) consolidate the product lines of Old AML and Central Life into one
integrated line of products by selecting the best products from each portfolio
and making them available through both the career general agency and PPGA
systems.

The Ameritas Joint Venture is an important part of the Company's overall
strategic plan to continue to identify profitable insurance products and to
achieve growth. The strategic alliance with Ameritas benefited the Company by
providing it with immediate access to a line of existing variable life insurance
and variable annuity products and a share in an already-established business,
thereby avoiding the time and cost associated with developing a new product
line.

AMERITAS JOINT VENTURE

The Company's partner in the Ameritas Joint Venture is Ameritas Life
Insurance Corp., a Nebraska mutual life insurance company which has been in
existence for more than 100 years. Ameritas is licensed to conduct business in
all states except New York and the District of Columbia, and had approximately
250 agents as of December 31, 1995. On a statutory basis, Ameritas had $1.8
billion in assets, $7.8 billion of insurance in force and $248.0 million in
policyowners' surplus as of September 30, 1996. Ameritas currently is rated "AA"
(Excellent) by Standard & Poor's and "A+" (Superior) by A.M. Best.

The Company participates in the Ameritas Joint Venture through AmerUs Life's
34% ownership interest in AMAL Corporation, a Nebraska corporation ("AMAL").
AMAL's operations are conducted through 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 46 states
and the District of Columbia and currently markets its products and those of AIC
through approximately 450 independent broker-dealers (with approximately 7,500
registered representatives) and the Ameritas distribution system. AIC is a
registered broker/dealer which is licensed to do business in 49 states. As of
September 30, 1996, AMAL had total consolidated assets of $1,025.6 million and
total consolidated shareholders' equity of $54.2 million on a GAAP basis. AVLIC
had $2.9 billion of insurance in force and $40.2 million in surplus as of
September 30, 1996, on a statutory basis.

AmerUs Life contributed $20.4 million in cash and substantially all of its
new fixed annuity production, as well as other consideration, for its interest
in AMAL. Under the terms of the Joint Venture Agreement, AmerUs Life has an
option to purchase an additional 5% to 15% of AMAL (the "Option") if certain
premium growth targets are met. The Option is exercisable in three portions,
each of which would permit AmerUs Life to acquire the number of newly-authorized
shares that would increase its equity ownership by 5%. Each portion of the
Option is exercisable at specified exercise prices set forth in the Joint
Venture Agreement.

Management of the Ameritas Joint Venture is shared between AmerUs Life and
Ameritas. Each has equal membership on the board of directors of AMAL, AVLIC and
AIC.

The Joint Venture Agreement provides that certain conditions may trigger
buy-sell provisions of the Joint Venture Agreement in the event of certain
disputes between the parties. For example, if at any time during the
continuation of the Ameritas Joint Venture a dispute arises between the parties,
the Joint Venture Agreement sets forth a mechanism for the resolution of the
dispute by informal means, including mediation. In certain specified
circumstances, in the event a major dispute remains unresolved, certain buy-sell
provisions of the Joint Venture Agreement can be triggered. Further, each party
may make and/ or enter into acquisitions, divestitures, mergers, consolidations,
reorganizations or other transactions affecting its corporate structure.
However, if any such transaction involves or constitutes a "change of control"
with respect to Ameritas or AmerUs Life, then the other party shall have the
right to trigger the buy-sell provisions of the Joint Venture Agreement. A
"change of control" is deemed to have occurred if a majority of the board of
directors of an entity or an ultimate parent shall consist of individuals who
were not directors of such entity prior to such transaction or who were not
nominated for board membership by such directors.

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The Company and Ameritas each have guaranteed the obligations of AVLIC. The
guarantee of each party is joint and several, and will remain in effect until
certain financial conditions are met.

PRODUCTS

The Company offers a diverse line of individual life insurance products
which are tailored to its markets and distributed primarily through its career
general agency and PPGA distribution systems. In addition, the Company is a
party to the Ameritas Joint Venture, which offers fixed and variable annuity and
variable life insurance products. As a result of superior operating
fundamentals, including mortality, persistency, operating expenses and
investment yield, the Company has had a long history of providing high-value,
low-cost products to its customers, while operating profitably. Moreover, the
Company continuously reviews and updates its product portfolio in order to
continue offering a broad range of products at competitive performance levels.

INDIVIDUAL LIFE INSURANCE AND FIXED ANNUITY PRODUCTS

The Company offers a broad line of individual traditional life and universal
life insurance products. Traditional life insurance has accounted for
approximately 60% to 75% of the Company's total individual life insurance
premiums for the last five years and universal life insurance has accounted for
approximately 25% to 40% of its total individual life insurance premiums for the
same time period. In addition, the Company has historically offered a broad line
of fixed annuity products.

The following table sets forth information regarding the Company's sales
activity by product:

SALES ACTIVITY BY PRODUCT

- ------------------
(A) Direct FIRST YEAR ANNUALIZED PREMIUMS.

(B) Direct first year and single collected premiums.

(C) Effective May 1996, substantially all new sales of individual deferred
annuities are made through the Ameritas Joint Venture. See "--Ameritas Joint
Venture."

TRADITIONAL LIFE INSURANCE PRODUCTS. The Company's traditional life
insurance products have a long history of being highly competitive within the
industry. The Company is the only participant in the industry to have had its
participating whole life insurance products ranked among the top ten in annual
surveys prepared by A.M. Best for each of the years 1976 through 1995. (Source:
Best's Review, Rankings of 10- and 20-year Interest Adjusted Surrender Cost
Index, 1976-1995). Management believes that such surveys provide a gauge for
measuring product performance based upon operating fundamentals, including
mortality, persistency, operating expenses and investment yield, and that the
consistent high rankings of the Company's traditional life insurance products in
such surveys reflect the Company's status within the industry as a provider of
high-value products to its customers.

The Company's 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.

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The Company also offers a SECOND TO DIE WHOLE LIFE INSURANCE product which
insures two lives and provides benefits upon the death of the second insured.
The Company targets its second to die products primarily to potential customers
seeking to achieve estate planning goals.

The Company also offers a portfolio of term life insurance policies that
provide 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.

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. In 1994, the Company
began offering an enhanced version of this product. 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, 1995, sales of participating whole life and
term life insurance products represented 66% and 9% of first year ANNUALIZED
PREMIUMS, respectively, for all individual life insurance products.

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. Specific charges are made against the account for the cost of insurance
protection and for the Company's expenses. The universal life form allows for
flexibility as to the amount and timing of premium payments and for the level of
death benefits provided.

The Company has maintained consistently competitive universal life products.
Based on annual surveys by A.M. Best measuring account and cash values of
universal life products, the Company's products have consistently ranked in the
top half of all companies included in the survey with respect to account values
and has ranked in the top quarter of all companies included in the survey with
respect to cash values. (Source: Best's Review, Rankings of 5-year Account and
Cash Values, 1991-1995; Rankings of 10-year Account and Cash Values, 1993-1995,
with 1993 the initial year of the survey of 10-year values).

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. Interest is credited to the policy at
a rate determined from time to time by the Company. The weighted average
crediting rate for the Company's universal life insurance liabilities was 6.67%
for the year 1995 and 6.31% for the nine months ended September 30, 1996.

For the year ended December 31, 1995, sales of universal life insurance
products represented 25% of first year annualized premiums for all individual
life insurance products.

FIXED ANNUITY PRODUCTS. Historically, the Company has offered a broad
portfolio of fixed annuity products. Annuities provide for the payment of
periodic benefits for 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's fixed annuity products are also highly competitive within the
industry. The Company's single premium deferred annuity products were ranked
among the industry leaders in annual surveys by A.M. Best for 1991 through 1995
measuring account and cash values of single premium deferred annuity products of
participants in the industry. (Source: Best's Review, Rankings of 5- and 10-year
Account Values and 5- and 10-year Cash Values, 1991-1995).

From September 1993 until the commencement of the Ameritas Joint Venture,
the majority of the Company's fixed annuity sales consisted of its Advantage
Series of deferred annuities. The Advantage Series consists of three products
comprised of two book value annuities, which are fixed annuities, and one market
value adjusted annuity, which is a fixed annuity with a market adjustment
feature. Both book

66
<PAGE>
value annuities have a first year interest rate guarantee. One of the book value
annuities also provides a bonus interest rate for the first year. The market
value adjusted annuity has a first year interest rate guarantee and also
provides a bonus interest rate for the first year. In 1995, the Advantage Series
accounted for over $163 million in premiums, which represented approximately 85%
of the Company's total fixed annuity production for the year.

AMERITAS JOINT VENTURE PRODUCTS

On April 1, 1996, the Company commenced the Ameritas Joint Venture with
Ameritas, through which the Company's distribution systems now offer AVLIC's
fixed annuity products and have begun to offer AVLIC's variable life insurance
and annuity products. The fixed annuities currently offered by the Ameritas
Joint Venture are substantially similar to the Company's Advantage Series
products. The Company's investment in the Ameritas Joint Venture affords the
Company access to a line of existing variable life insurance and variable
annuity products while providing a lower-cost entry into an established
business, thereby eliminating significant start-up costs and allowing for
immediate potential earnings. See "--Ameritas Joint Venture."

The Ameritas Joint Venture offers, through AVLIC, 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, which include Fidelity
Management and Research Company, Fred Alger Management, Inc. and Massachusetts
Financial Services Company, owners of variable annuities and life insurance
policies are able to choose from a range of investment funds offered by each
manager. In the future, AVLIC may also sell low load life insurance products,
which have a lower commission rate, and may acquire other companies or business
lines in appropriate circumstances.

Under the terms of the Joint Venture Agreement governing the Ameritas Joint
Venture, the Company and Ameritas will write a substantial portion of their new
single and flexible premium deferred fixed annuities and variable annuities and
variable life insurance through the Ameritas Joint Venture (provided that the
Company has retained the right to continue to issue business to its fixed
annuity customers in existence prior to the effective date of the Joint Venture
Agreement). In connection with executing the Joint Venture Agreement, the
parties also entered into a Management and Administrative Service Agreement
which was effective as of April 1, 1996 (the "Service Agreement"), pursuant to
which the parties agreed that all product development, administration and
investment management services relating to the fixed annuity products offered by
the Ameritas Joint Venture will be performed by the Company, and all such
functions relating to the variable life insurance and variable annuity products
offered by the Ameritas Joint Venture will be performed by Ameritas. Ameritas
also provides certain other administrative services to the Ameritas Joint
Venture under the Service Agreement.

The variable life insurance products and the fixed and variable annuities
offered by the Ameritas Joint Venture are distributed through the Company's
career general agency and PPGA distribution systems, as well as through the
distribution systems of Ameritas and AVLIC. See "--Ameritas Joint Venture" and
"Certain Transactions and Relationships."

In response to customer demand, the Company has developed an equity index
annuity which it anticipates will be offered through the Ameritas Joint Venture
beginning in the fourth quarter of 1996. An equity index annuity provides a
baseline fixed rate of return in addition to the possibility of sharing in a
portion of the appreciation realized from an investment in an indexed investment
fund, such as the S&P 500 stock index.

SPONSORED PRODUCTS

The Company also derives fee income from the sale of various sponsored
products through its career general agency and PPGA distribution systems under
co-marketing arrangements with leading insurance providers for such products.
Such sponsored products include individual long-term disability

67
<PAGE>
and group life, health and dental insurance products. In addition, the Company's
career general agency and PPGA distribution systems sell certificates of deposit
issued by AmerUs Bank, from which the Company obtains additional fee income.

The following table sets forth the Company's collected premiums for the
periods indicated:

COLLECTED PREMIUMS BY PRODUCT

<TABLE>
<CAPTION>
FOR THE
NINE MONTHS
ENDED SEPTEMBER 30,
FOR THE YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Direct individual life premiums collected:
Traditional life:
First year & single...................... $ 51,890 $ 53,668 $ 70,786 $ 71,830 $ 71,267 $ 61,720 $ 58,512
Renewal.................................. 120,625 114,751 153,299 143,048 130,223 119,108 108,698
--------- --------- --------- --------- --------- --------- ---------
Total................................ $ 172,515 $ 168,419 $ 224,085 $ 214,878 $ 201,490 $ 180,828 $ 167,210
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Universal Life:
First year & single...................... $ 10,972 $ 10,773 $ 15,451 $ 10,224 $ 10,939 $ 17,235 $ 26,369
Renewal.................................. 57,199 58,687 77,151 80,338 83,372 84,405 80,114
--------- --------- --------- --------- --------- --------- ---------
Total................................ $ 68,171 $ 69,460 $ 92,602 $ 90,562 $ 94,311 $ 101,640 $ 106,483
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Total direct life...................... $ 240,686 $ 237,879 $ 316,687 $ 305,440 $ 295,801 $ 282,468 $ 273,693
Reinsurance assumed........................ 1,098 1,030 1,337 1,114 1,154 988 1,178
Reinsurance ceded.......................... (10,269) (10,453) (13,795) (13,477) (15,020) (14,903) (14,776)
--------- --------- --------- --------- --------- --------- ---------
Total individual life, net of
reinsurance............................... $ 231,515 $ 228,456 $ 304,229 $ 293,077 $ 281,935 $ 268,553 $ 260,095
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Direct annuity premiums collected:
Individual (A)........................... $ 70,191 $ 142,359 $ 197,959 $ 189,097 $ 91,745 $ 66,750 $ 110,080
Group.................................... 50 (724) (665) 2,580 1,726 766 867
--------- --------- --------- --------- --------- --------- ---------
Total annuities........................ 70,241 141,635 197,294 191,677 93,471 67,516 110,947
Reinsurance ceded.......................... (424) (774) (853) (1,123) (1,147) (1,393) (1,467)
--------- --------- --------- --------- --------- --------- ---------
Total annuities, net of reinsurance........ $ 69,817 $ 140,861 $ 196,441 $ 190,554 $ 92,324 $ 66,123 $ 109,480
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Total group life, net of reinsurance (B)... $ 2,171 $ 1,984 $ 6,634 $ 10,436 $ 9,669 $ 8,367 $ 8,287
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Total accident & health, net of reinsurance
(C)....................................... $ 151 $ 184 $ 264 $ 387 $ 459 $ 607 $ 4,410
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Total collected premiums, net of
reinsurance............................... $ 303,654 $ 371,485 $ 507,568 $ 494,454 $ 384,387 $ 343,650 $ 382,272
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
</TABLE>

- ------------------
(A) Effective May 1996, substantially all new sales of individual deferred
annuities are made through the Ameritas Joint Venture. See "--Ameritas Joint
Venture."

(B) The Company sold substantially all of its group life business as of July 1,
1996 and is no longer actively marketing this line of business.

(C) The Company sold substantially all of its accident and health business in
1991 and is no longer actively marketing this line of business.

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<PAGE>
The following table sets forth information regarding life insurance and
annuities in force for each date presented:

LIFE INSURANCE AND ANNUITIES IN FORCE

<TABLE>
<CAPTION>
AS OF AS OF DECEMBER 31,
SEPTEMBER 30, ---------------------------------------------------------------
1996 1995 1994 1993 1992 1991
-------------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Individual life insurance:
Traditional
Number of policies............ 248,627 253,656 259,229 262,243 264,683 274,090
GAAP life reserves............ $ 1,184,259 $ 1,120,799 $ 1,033,909 $ 945,763 $ 846,661 $ 779,594
Face amounts.................. $ 16,557,000 $16,600,000 $15,871,000 $15,201,000 $14,094,000 $13,813,000
Universal life
Number of policies............ 119,615 121,619 124,225 127,658 131,196 129,429
GAAP life reserves............ $ 812,173 $ 784,363 $ 740,638 $ 700,556 $ 653,038 $ 596,721
Face amounts.................. $ 12,073,000 $12,211,000 $12,631,000 $12,744,000 $13,244,000 $12,607,000
Total individual life
Number of policies............ 368,242 375,275 383,454 389,901 395,879 403,519
GAAP life reserves............ $ 1,996,432 $ 1,905,162 $ 1,774,547 $ 1,646,319 $ 1,499,699 $ 1,376,315
Face amounts.................. $ 28,630,000 $28,811,000 $28,502,000 $27,945,000 $27,338,000 $26,420,000
Annuities (A):
Number of policies............ 49,128 56,054 52,616 50,322 44,177 42,372
GAAP reserves................. $ 1,227,023 $ 1,327,176 $ 1,337,395 $ 1,260,775 $ 1,157,313 $ 1,105,157
Group life insurance (B):
Number of lives............... 33,857 32,724 29,592 27,013 28,238 31,481
Face amounts.................. $ 894,000 $ 829,000 $ 741,000 $ 834,000 $ 846,000 $ 1,467,000
</TABLE>

- ------------------
(A) Effective May 1996, substantially all new sales of individual deferred
annuities are made through the Ameritas Joint Venture. See "--Ameritas Joint
Venture."

(B) The Company sold substantially all of its group life business as of July 1,
1996 and is no longer actively marketing this line of business.

The reductions in life insurance and annuities in force are attributable to
policy surrenders, policy terminations or expirations, and consolidations of one
or more outstanding policies into new policies. Many of the policies which have
terminated were of a lower face amount than the average for all policies in
force.

The Company has experienced higher persistency for its life insurance
products (i.e., lower lapse rates) than industry averages. Persistency is
measured in terms of renewal premiums. While the Company has experienced a
decrease in the number of policies outstanding, the size of policies outstanding
has increased and the amount of premiums collected has increased. Such increased
premium levels are in large part due to the Company's favorable persistency. The
ability to achieve higher persistency also results in lower unit costs. The
following table illustrates lapse rates on individual life insurance products
for the Company and for stock and mutual life insurance companies for the years
ended December 31, 1991 through 1995:

INDIVIDUAL LIFE INSURANCE LAPSE RATIOS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------
1995 1994 1993 1992
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Mutual life companies (A)............................................. 7.4% 7.4% 9.8% 8.5%
Stock life companies (A).............................................. 9.3 8.8 9.9 9.9
Total life insurance industry (A)................................... 8.6 8.3 9.8 9.4
Company............................................................... 7.2 7.1 6.9 6.9

1991
-----------
<S> <C>
Mutual life companies (A)............................................. 8.8%
Stock life companies (A).............................................. 10.7
Total life insurance industry (A)................................... 10.1
Company............................................................... 6.9
</TABLE>

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

(A) Source: A.M. Best individual life lapse ratios (median values) as measured
by face amount of life insurance.

69
<PAGE>
DISTRIBUTION

The Company markets its insurance products on a national basis primarily
through a career general agency system, a PPGA system, independent insurance
brokers and certain of the Company's affiliates. The Company employs ten
Regional Vice Presidents who are responsible for supervising the career general
agencies and/or PPGA agents within their assigned geographic regions.

The following table illustrates sales activity of the Company's three
principal distribution sources for the nine months ended September 30, 1996 and
the year ended December 31, 1995:

SALES ACTIVITY BY DISTRIBUTION SOURCE

<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1996 DECEMBER 31, 1995
--------------------------- -------------------
(IN THOUSANDS)
<S> <C> <C>
Career General Agency System:
Traditional life insurance (A)................................ $ 10,454 $ 14,754
Universal life insurance...................................... 4,955 6,767
Individual annuity (B)........................................ 41,505 152,190
-------- ----------
Subtotal.................................................... $ 56,914 $ 173,711
-------- ----------
-------- ----------
PPGA System:
Traditional life insurance (A)................................ 5,242 8,761
Universal life insurance...................................... 1,343 1,121
Individual annuity (B)........................................ 15,017 26,615
-------- ----------
Subtotal.................................................... $ 21,602 $ 36,497
-------- ----------
-------- ----------
Sales through Affiliates:
Traditional life insurance (A)................................ 28 59
Universal life insurance...................................... 64 184
Individual annuity (B)........................................ 6,576 12,669
-------- ----------
Subtotal.................................................... $ 6,668 $ 12,912
-------- ----------
-------- ----------
Total Sales:
Traditional life insurance (A)................................ 15,724 23,574
Universal life insurance...................................... 6,362 8,072
Individual annuity (B)........................................ 63,098 191,474
-------- ----------
Total (A)(B)................................................ $ 85,184 $ 223,120
-------- ----------
-------- ----------
</TABLE>

- --------------
(A) Amounts for traditional and universal life insurance reflect direct first
year annualized premiums. Amounts for annuities reflect direct first year
and single collected premiums.

(B) Effective May 1996, substantially all new sales of individual deferred
annuities are made through the Ameritas Joint Venture. See "--Ameritas Joint
Venture."

CAREER GENERAL AGENCY SYSTEM AND BROKERS

Under the career general agency system, the Company enters into a
contractual arrangement with the career general agent for the sale of insurance
products by the career agents and brokers assigned to the career general agent's
agency. The career general agents are primarily compensated by receiving a
percentage of the first year commissions paid to career agents and brokers in
the career general agent's agency and by renewal commissions on premiums
subsequently collected on that business.

The career 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 career agents and brokers in their agency. Currently, the Company
has 33 career general agencies in 20 states, through which approximately 550
career

70
<PAGE>
agents sell the Company's products. While career agents in the career general
agency system are non-exclusive, the Company believes most agents use the
Company's products for a majority of their new business of the type of products
offered by the Company. No single career general agency accounts for more than
10% of the total first year commissions paid by the Company.

Career agents are also independent contractors and are primarily compensated
by commissions on first year and renewal premiums collected on business written
by them. In addition, career agents can earn bonus commissions, graded by
production and persistency on their business.

The Company believes the quality of the agents in its career general agency
system is competitive with that of other life insurance companies. The Company's
retention of its career general agency sales force has historically been above
the average retention rates of other companies in the industry. The Company
attributes its success in attracting and retaining qualified agents to the high
quality of its products, its marketing support and administrative services and
its competitive compensation structure. The Company also provides career general
agents with various screening tools which enable the general agents to screen
career agent applicants to eliminate those who may not be qualified.

The Company also sells its products through a network of approximately 1,700
insurance brokers in all jurisdictions in which the Company is licensed to sell
insurance. Brokers are independent contractors who sell a variety of insurance
products issued by various companies. Brokers operate through the career general
agency system but are compensated under a commission structure which is separate
from those used for career agents and in the PPGA system.

PERSONAL PRODUCING GENERAL AGENCY SYSTEM

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.

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.

DISTRIBUTIONS THROUGH AFFILIATES

The Company also sells its products through certain of its affiliated
companies. The Company has arrangements with AmerUs Investments, Inc. ("AmerUs
Investments"), a wholly-owned subsidiary of AmerUs Bank, to market products of
the Company. The Company has entered into an agreement with AmerUs Investments
pursuant to which the Company and AVLIC pay AmerUs Investments fees in the form
of commissions in exchange for generating sales of such products. Persons
selling the Company's products under this arrangement are employees of AmerUs
Investments and are paid a regular salary in addition to being eligible for
commissions under a commission structure (which is distinct from the structure
used under the Company's career general agency and PPGA systems). See "Certain
Transactions and Relationships--Sale of Insurance Policies."

AVLIC has a separate arrangement with AmerUs Investments pursuant to which
AmerUs Investments sells variable and fixed annuities and variable life
insurance products.

MARKETING SUPPORT SERVICES

The Company also supports its distribution systems with a trained staff of
marketing and other professionals who provide the career general agency and PPGA
systems with a wide range of services in support of the sale of the Company's
products. In addition to providing information about the products offered by the
Company, these professionals are able to offer detailed advice on business
insurance, financial and estate planning and other advanced underwriting
services.

The Company also provides its agents in both the career general agency and
PPGA systems with insurance industry information support services and computer
technology. For example, an advanced

71
<PAGE>
illustration and sales presentation computer software package is provided to
agents to assist them in their selling efforts. In addition, the Company's
agents use computer technology to individualize marketing and product use
information at the point of sale to better service policyowners and potential
policyowners. The Company supports these systems with in-house computer
professionals to assist agents with software and systems questions relating to
its computer-assisted marketing tools.

The Company conducts an intensive annual educational conference as part of
its continuing efforts to educate and train agents and to market the Company's
products. The conference is generally well-attended by the Company's agents and
other interested persons who are not affiliated with the Company.

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. As demonstrated by the following table, the Company's underwriting
standards produced mortality results which are generally more favorable than the
assumptions used in its product pricing, which are based upon industry
guidelines:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Ratio of actual mortality to pricing mortality (A)(B)............ 81.2% 90.5% 86.4% 88.8% 94.7%
</TABLE>

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

(A) Results illustrated for 1991-1993 are for Central Life only. The 1991-1993
results for Old AML are unavailable.

(B) Pricing mortality is established at a level below the 1975-1980 Basic Table,
an experience mortality table widely used in the industry as a basis of
mortality.

Management also believes that its actual mortality results compare favorably
to those of others in the industry. The Company believes that its favorable
mortality results are attributable to, among other things, the geographic
location of its customer base in rural and suburban areas (as opposed to urban
areas), the higher-income profile of its customer base and its consistent
application of appropriate underwriting criteria to the processing of new
customer applications.

RESERVES

In accordance with applicable insurance regulations, the Company records as
liabilities in its statutory financial statements actuarially determined
reserves that are calculated to meet future obligations of the Company's in
force life insurance and annuity contracts. The reserves are based on
actuarially recognized methods using prescribed MORBIDITY and mortality tables
and interest rates. Reserves include UNEARNED PREMIUMS, premium deposits, claims
that have been reported but are not yet paid, claims that have been incurred but
have not been reported, and claims in the process of settlement. The Company's
reserves comply with state insurance department statutory requirements.

The liability for future policy benefits reflected in the Consolidated
Financial Statements for traditional life insurance is computed using a net
level method, utilizing the guaranteed interest and mortality rates used in
calculating cash surrender values as described in the contracts. Benefit
reserves for traditional limited-payment life insurance policies include the
deferred portion of the premiums received during the premium-paying period.
Deferred premiums are recognized as income over the life of the policies. 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.

Future policy benefit reserves for universal life insurance and investment
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.

72
<PAGE>
REINSURANCE

In accordance with industry practices, the Company reinsures portions of its
life insurance and disability income exposure, generally with unaffiliated
insurance companies under traditional indemnity reinsurance agreements.
Reinsurance arrangements entered into with unaffiliated insurance companies are
in accordance with standard reinsurance practices within the industry. As of
December 31, 1995, the Company had reinsurance arrangements in place for life
insurance having a face amount of approximately $2.9 billion with 20
unaffiliated reinsurers. All of the companies with which the Company had life
reinsurance arrangements as of such date were rated "A-" or better by A.M. Best.
The Company's largest life reinsurance relationship as of December 31, 1995 was
with RGA Reinsurance Company with life reinsurance in the face amount of
approximately $1 billion. As of December 31, 1995, the Company's top five
reinsurers (by face amount reinsured) constituted approximately 80% of the total
face amount reinsured by the Company as of such date. Of the top five
reinsurers, four were rated "A+" and the other was rated "A" by A.M. Best as of
December 31, 1995.

The Company enters into indemnity reinsurance arrangements to assist in
diversifying its risks and to limit the maximum loss on risks that exceed the
Company's policy retention limits. The Company's present maximum retention limit
for life insurance policies is $1,000,000 per life insured. Indemnity
reinsurance does not fully discharge the Company's obligation to pay claims on
the reinsured business. The Company as the CEDING insurer 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.

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 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 AmerUs Life. Management regularly monitors individual assets and
asset groups, in addition to monitoring the overall asset mix. In addition, the
Investment Committee reviews investment guidelines and monitors 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.

The Company's asset/liability management approach utilizes separate
investment portfolios for specific 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.

73
<PAGE>

In force reserves and the assets allocated to each segment are modeled 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
collateralized mortgage obligations ("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. Currently, the Company utilizes derivatives
to support three specific targeted strategies. The first strategy involves the
conversion of floating rate assets to synthetic fixed rate assets to achieve a
greater risk-adjusted return. Secondly, the Company uses derivatives to help
protect the Company against disintermediation risk in the event of a general
rise in interest rates. Finally, the Company uses derivative products to assist
in the management of duration mismatch of the Company's assets and liabilities.

The Company seeks to manage the relationship between risk and expected
return to maintain a prudent balance between the two. Like others in the
industry, the Company is exposed to various potential sources of investment risk
including: credit risk relating to the uncertainty attached to the timing and
amount of principal and interest payments, interest rate risk relating to the
economic effects of changing interest rates, real estate risk relating to
changes in property value due to local economic and demographic conditions, and
liquidity risk relating to holding assets for which there is no active secondary
market. The Company manages credit risk principally by careful analysis of the
creditworthiness of each issuer, diversification of its holdings and prudent
asset allocation. It manages interest rate risk through sophisticated
asset/liability management techniques, including the selective use of derivative
instruments. It manages real estate risk principally by geographic and
demographic diversification, careful periodic monitoring of local economic and
other conditions and by limiting loan to value rates to acceptable levels. The
Company manages liquidity risk principally by asset allocation and by
maintaining various credit facilities and a portfolio of public, investment
grade securities in an amount not less than 50% of the total invested assets.

The objective of the Company's mortgage backed securities ("MBS")
investments is to provide incremental return, while maintaining reasonable
liquidity and cash flow stability. Each MBS is evaluated to determine its
interest rate sensitivity and average life variability. In general, the Company
seeks investments which provide improved cash flow stability through either
implicit or explicit prepayment protection. Investments with implicit prepayment
protection can take the form of pass-throughs or CMOs backed by seasoned pools
of loans which have already had ample opportunity to refinance but have failed
to do so. Explicit prepayment protection can take the form of prepayment
lockouts, yield maintenance provisions or prepayment penalties, which are common
features of multifamily MBS, commercial MBS and FHA-insured project loans. At
September 30, 1996, the Company's MBS investment portfolio composition was
approximately 14% fixed rate pass-throughs backed by seasoned loan pools, 19%
floating rate pass-throughs and 67% CMOs with some form of explicit prepayment
protection. The Company has established specific investment guidelines for the
management of MBS. As a general policy, the Company does not invest in
interest-only and principal-only or other similar leveraged derivative mortgage
instruments.

The Company has improved the quality of its investment portfolio in recent
years in a number of respects. The Company has reduced real estate-related
assets (defined as real estate loans and real estate equity investments) as a
percentage of total invested assets from previous levels. Real estate related
assets, which totaled 19.2% of invested assets as of December 31, 1993, were
reduced to 14.5% of invested assets as of December 31, 1994, to 10.2% of total
invested assets as of December 31, 1995 and to 7.8% (6.5% after giving effect to
the Capital Contribution) of invested assets as of September 30, 1996. The
Company's problem loan ratio (defined as aggregate delinquent, in process of
foreclosure and restructured mortgage loans) also decreased from 21.3% as of
December 31, 1994 to 9.4% as of December 31, 1995, and to 6.2% (4.3% after
giving effect to the Capital Contribution) as of September 30, 1996.

The Company in recent years has also reduced its exposure to higher risk
fixed maturity securities and common stock. The Company's percentage of higher
risk fixed maturity assets (defined as assets

74
<PAGE>

categorized in NAIC designations 3-6) was approximately 5.1% of total invested
assets as of September 30, 1996, as compared to 5.3% as of December 31, 1995 and
6.9% as of December 31, 1994. In addition, the Company decreased its common
stock holdings to 0.4% of total invested assets as of September 30, 1996, down
from 2.1% as of December 31, 1995 and 3.7% as of December 31, 1994.

INVESTMENT MONITORING AND VALUATION

As part of the Company's investment management process, it regularly
monitors its invested assets. Fixed maturity securities are reviewed upon
receipt of the obligor's financial statements, generally on a quarterly basis,
for financial performance and historical compliance with financial covenants.
Generally, the Company reviews its commercial mortgage loan and equity real
estate portfolios on a monthly basis and identifies all commercial mortgage
loans and equity real estate which cause management to conclude that such loans
or investments require increased management attention due to payment
delinquencies. Detailed property analyses and property valuations are performed
annually for each commercial mortgage loan. The Company generally requires
borrowers to submit their financial statements for annual review.

The Company has policies and procedures which management believes value
invested assets fairly and consistently. As a result of the implementation of
SFAS 115 as of December 31, 1993, certain fixed maturity securities are
classified as available-for-sale, and therefore are carried at fair value in the
Company's Consolidated Financial Statements. Public and private fixed maturity
securities are carried principally at fair value, which is based on quoted
market prices or dealer quotes. If a quoted market price is unavailable, fair
value is estimated using values obtained from independent pricing services. In
the case of private placements, if quotes are unavailable the price is estimated
by discounting expected future cash flows using a current market rate applicable
to the yield, credit quality and maturity of the investments.

Equity securities are carried principally at fair value, based on quoted
market prices. To value performing fixed interest rate mortgage loans, the
estimated net cash flows to maturity are discounted to derive an estimated
market value. The discount rate used is based on the individual loan's remaining
weighted average life and a basis point spread over the United States Treasury
yield curve at the date of valuation. Performing variable rate commercial loans
and residential loans are valued at par. Restructured, foreclosed or delinquent
loans, as well as loans to affiliates, are 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. Equity real estate is carried at
depreciated cost, or amortized cost for capital leases, less valuation
allowances. Equity real estate acquired in satisfaction of debt is valued at the
lower of cost or estimated fair value at the date of acquisition and is
periodically revalued. 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.

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.

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
"The Reorganization and Distribution of the Non-Life Insurance
Subsidiaries--Establishment and Operation of the Closed Block." The following
table summarizes consolidated invested assets by asset category as of September
30, 1996 and as of December 31, 1995, 1994 and 1993, and sets forth the
allocation of such assets between the Closed Block and the general account. The
remaining information in this Prospectus relating to the Company's investment
portfolio presents information about the investment portfolio on a combined
basis (including invested assets in both the Closed Block and the general
account).

75
<PAGE>
CONSOLIDATED INVESTED ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, 1996 ------------------------------------------------
-------------------------------------------------
CARRYING CARRYING 1995 1994
VALUE VALUE-- COMBINED ----------------------- -----------------------
CLOSED GENERAL CARRYING CARRYING CARRYING
BLOCK ACCOUNT VALUE % OF TOTAL VALUE % OF TOTAL VALUE % OF TOTAL
----------- ----------- ----------- ---------- ----------- ---------- ----------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed maturity
securities:
Public.............. $ 667.6 $ 2,100.0 $ 2,767.6 72.2% $ 2,717.7 68.5% $ 2,056.4 58.9%
Private............. 176.2 197.6 373.8 9.7 424.4 10.7 510.3 14.6
----------- ----------- ----------- ----- ----------- ----- ----------- -----
Subtotal 843.8 2,297.6 3,141.4 81.9 3,142.1 79.2 2,566.7 73.5
Equity securities..... 15.5 74.6 90.1 2.4 109.7 2.8 178.8 5.1
Mortgage loans........ -- 260.2 260.2 6.8 353.6 8.9 447.7 12.8
Policy loans.......... 165.3 64.0 229.3 6.0 220.0 5.6 209.5 6.0
Real estate:
Investments......... -- 18.8 18.8 0.5 20.2 0.5 29.4 0.9
Foreclosures........ -- 21.2 21.2 0.5 31.9 0.8 28.8 0.8
----------- ----------- ----------- ----- ----------- ----- ----------- -----
Subtotal.......... -- 40.0 40.0 1.0 52.1 1.3 58.2 1.7
Other invested
assets............... -- 61.8 61.8 1.6 48.1 1.2 22.3 0.6
Short-term
investments.......... 0.7 12.0 12.7 0.3 39.4 1.0 8.5 0.3
----------- ----------- ----------- ----- ----------- ----- ----------- -----
Total invested
assets............... $ 1,025.3 $ 2,810.2 $ 3,835.5 100.0 % $ 3,965.0 100.0 % $ 3,491.7 100.0%
----------- ----------- ----------- ----- ----------- ----- ----------- -----
----------- ----------- ----------- ----- ----------- ----- ----------- -----

1993
-----------------------
CARRYING
VALUE % OF TOTAL
----------- ----------

<S> <C> <C>
Fixed maturity
securities:
Public.............. $ 2,015.8 55.4%
Private............. 516.6 14.2
----------- -----
Subtotal 2,532.4 69.6
Equity securities..... 174.4 4.8
Mortgage loans........ 652.2 17.9
Policy loans.......... 197.1 5.4
Real estate:
Investments......... 14.2 0.4
Foreclosures........ 32.6 0.9
----------- -----
Subtotal.......... 46.8 1.3
Other invested
assets............... 14.8 0.4
Short-term
investments.......... 21.8 0.6
----------- -----
Total invested
assets............... $ 3,639.5 100.0 %
----------- -----
----------- -----
</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 September 30,
1996, fixed maturity securities were $3,141.4 million, or 81.9% of the carrying
value of invested assets with public and private fixed maturity securities
constituting $2,767.6 million, or 88.1%, and $373.8 million, or 11.9%, of total
fixed maturity securities, respectively.

The following table summarizes the composition of the fixed maturity
securities by category as of September 30, 1996 and December 31, 1995:

COMPOSITION OF FIXED MATURITY SECURITIES

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------------ ------------------------
CARRYING CARRYING
VALUE % OF TOTAL VALUE % OF TOTAL
---------- ------------ ---------- ------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
U.S. government/agencies........................................ $ 57.0 1.8% $ 67.2 2.1%
State and political subdivisions................................ -- -- 1.7 0.1
Foreign governments............................................. 26.2 0.8 22.4 0.7
Corporate....................................................... 1,920.6 61.2 2,131.8 67.8
MBS:
U.S. government/agencies.................................... 673.4 21.4 686.8 21.9
Non-government/agencies..................................... 464.2 14.8 232.2 7.4
---------- ----- ---------- -----
Subtotal-MBS................................................ 1,137.6 36.2 919.0 29.3
---------- ----- ---------- -----
Total........................................................... $ 3,141.4 100.0% $ 3,142.1 100.0%
---------- ----- ---------- -----
---------- ----- ---------- -----
</TABLE>

76
<PAGE>
The following table summarizes corporate fixed maturity securities by
industry of the issuers:

COMPOSITION OF CORPORATE
FIXED MATURITY SECURITIES BY INDUSTRY

<TABLE>
<CAPTION>
% OF CORPORATE
SEPTEMBER 30, 1996 FIXED MATURITY
CLASSIFICATION CARRYING VALUE SECURITIES
- --------------------------------------------------------------------------- -------------------- -----------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Utilities.................................................................. $ 332.3 17.3%
Nondepository credit institutions.......................................... 210.0 10.9
Depository institutions.................................................... 194.7 10.1
Petroleum refining and related industries.................................. 101.8 5.3
Chemicals and related products............................................. 94.2 4.9
Air transportation......................................................... 89.3 4.6
Electrical and other electrical equipment (excluding computers)............ 76.2 4.0
Industrial, commercial machinery and computer equipment.................... 64.5 3.4
Oil and gas................................................................ 59.5 3.1
General merchandise stores................................................. 50.8 2.7
Other...................................................................... 647.3 33.7
-------- -----
Total.................................................................. $ 1,920.6 100.0%
-------- -----
-------- -----
</TABLE>

The following table summarizes fixed maturity securities by remaining
maturity as of September 30, 1996:

REMAINING MATURITY OF FIXED MATURITY SECURITIES

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------------
CARRYING
VALUE % OF TOTAL
---------- ------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Due:
In one year or less (1996)...................................... $ 11.3 0.4%
One to five years (1997-2001)................................... 475.2 15.1
Five to 10 years (2002-2006).................................... 961.9 30.6
10 to 20 years (2007-2016)...................................... 415.3 13.2
Over 20 years (2017 and after).................................. 140.1 4.5
---------- -----
Subtotal...................................................... 2,003.8 63.8
MBS............................................................. 1,137.6 36.2
---------- -----
Total....................................................... $ 3,141.4 100.0%
---------- -----
---------- -----
</TABLE>

The Company's portfolio of investment grade fixed maturity securities is
diversified by number and type of issuer. As of September 30, 1996, investment
grade fixed maturity securities included the securities of over 658 issuers,
with 1,039 different issues of securities. No issuer represents more than 1.8%
of investment grade fixed maturity securities.

Below-investment grade fixed maturity securities as of September 30, 1996
included the securities of 48 issuers representing 5.1% of total invested
assets, with the largest being a $9.9 million investment.

77
<PAGE>

As of September 30, 1996, 76.8% 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 September 30, 1996:

FIXED MATURITY SECURITIES BY NAIC DESIGNATION

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------------------------------------------------------
PUBLIC PRIVATE TOTAL
----------------------- ------------------------ -----------------------
NAIC STANDARD & POOR'S CARRYING CARRYING CARRYING
DESIGNATION EQUIVALENT DESIGNATION VALUE % OF TOTAL VALUE % OF TOTAL VALUE % OF TOTAL
- ------------ ------------------------------ ---------- ----------- ----------- ----------- ---------- -----------
(DOLLARS IN MILLIONS)
<C> <S> <C> <C> <C> <C> <C> <C>
1 A- or Higher.................. $ 1,853.2 67.0% $ 84.8 22.7% $ 1,938.0 61.7%
2 BBB- to BBB+.................. 758.9 27.4 248.2 66.4 1,007.1 32.1
---------- ----- ----------- ----- ---------- -----
Total investment grade........ 2,612.1 94.4 333.0 89.1 2,945.1 93.8
---------- ----- ----------- ----- ---------- -----
3 BB to BB+..................... 113.0 4.1 26.2 7.0 139.2 4.4
4 B............................. 42.5 1.5 13.0 3.5 55.5 1.8
5 CCC or lower.................. -- -- 0.1 -- 0.1 --
6 In or near default............ -- -- 1.5 0.4 1.5 --
---------- ----- ----------- ----- ---------- -----
155.5 5.6 40.8 10.9 196.3 6.2
---------- ----- ----------- ----- ---------- -----
$ 2,767.6 100.0% $ 373.8 100.0% $ 3,141.4 100.0%
---------- ----- ----------- ----- ---------- -----
---------- ----- ----------- ----- ---------- -----
</TABLE>

MBS comprise a core position within the Company's fixed maturity securities
investments. MBS investments include residential, commercial MBS, home equity
loans (including home equity loans purchased from one of the Company's
affiliates, see "Certain Transactions and Relationships--Purchase of Loans and
Securitization"), manufactured housing, FHA Title I and CMBS. Residential
mortgage pass-throughs and CMOs total $888.9 million or 23.2% of total invested
assets. As of September 30, 1996, MBS were $1,137.6 million or 29.7%, of total
invested assets of which $673.4 million, or 59.2% of MBS were guaranteed by the
United States government or an agency of the United States government. Other MBS
were $464.2 million, or 40.8%, of MBS as of September 30, 1996. Management
believes that the quality of assets in the MBS portfolio is generally high, with
87.1% of such assets representing agency backed or "AAA" rated securities.

The Company uses interest rate swaps and caps to reduce its exposure to
changes in interest rates and to manage duration mismatches. Although the
Company is subject to the risk that counterparties will fail to perform, credit
standings of counterparties are monitored regularly. The Company's policy is to
contract only with counterparties that are rated "AA" or higher; accordingly, it
is expected that counterparties will be able to satisfy their obligations under
such contracts. 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 and caps, which represent the extent of the Company's
involvement in such contracts but not the risk of loss, at September 30, 1996
amounted to $980.0 million. The swaps had a carrying value and a fair value
which amounted to a net receivable position of $6.0 million at September 30,
1996. The carrying value and fair value of interest rate caps and swaptions
amounted to $9.9 million and $10.0 million, respectively, and are reflected as
"other investments" on the Company's consolidated financial statements as of
September 30, 1996. The net amount payable or receivable from interest rate
swaps and caps is accrued as an adjustment to interest income.

MORTGAGE LOANS. As of September 30, 1996, mortgage loans in the investment
portfolio were $260.2 million, or 6.8% of the aggregate carrying value of
invested assets ($250.5 million, or 6.4%, after giving effect to the Capital
Contribution). Of the September 30, 1996 amount, commercial mortgage loans were
98.8%, and residential mortgage loans were 1.2%.

In the last two years, the Company has significantly reduced its mortgage
loan investments as a percentage of its invested assets through sales of certain
mortgage loan assets; decreased originations

78
<PAGE>

of new loans and write-downs of delinquent loans. As of December 31, 1993,
mortgage loans totaled $652.2 million, or 17.9% of invested assets. By December
31, 1995, such investments totaled $353.6 million, or 8.9% of invested assets
and by September 30, 1996 such investments totaled $260.2 million, or 6.8% of
invested assets. Commercial mortgage loans consist primarily of fixed-rate
mortgage loans on complete properties. As of September 30, 1996, the Company
held 156 individual commercial mortgage loans having an average interest rate,
maturity and balance of 9.1%, 73 months and $1.7 million, respectively.

The following table sets forth additions, reductions from payments and other
charges, foreclosures and miscellaneous adjustments to the mortgage loan
portfolio based on unpaid principal balances for the six-month periods ended
September 30, 1996 and 1995 and for the years ended December 31, 1995, 1994 and
1993:

MORTGAGE LOAN ASSET FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------ -------------------------------------
1996 1995 1995 1994 1993
----------- ----------- ----------- ----------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Commercial mortgage loans:
Beginning balance................................ $ 379.4 $ 504.0 $ 504.0 $ 723.6 $ 733.3
Plus: Additions.................................. 19.6 24.8 39.9 75.3 73.1
Less: Payments and other credits................. 75.1 93.0 134.9 123.3 73.1
Foreclosed properties....................... 6.2 24.8 18.0 14.0 9.7
Sales....................................... 47.2 -- 11.6 157.6 --
----------- ----------- ----------- ----------- -----------
Ending balance................................... 270.5 411.0 379.4 504.0 723.6
Residential mortgage loans......................... 3.3 5.0 4.3 9.2 8.8
----------- ----------- ----------- ----------- -----------
273.8 416.0 383.7 513.2 732.4
Valuation allowance for mortgage loan losses....... 13.6 41.1 30.1 65.5 80.2
----------- ----------- ----------- ----------- -----------
Total mortgage loans on real estate................ $ 260.2 $ 374.9 $ 353.6 $ 447.7 $ 652.2
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Valuation allowance as percentage of mortgage
loans............................................. 5.0% 9.9% 7.8% 12.8% 11.0%
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>

Substantially all of the new commercial mortgage loans were originated by
the Company through mortgage loan correspondents with whom the Company had an
ongoing relationship at the time such mortgage loans were originated. The
Company is not originating new commercial mortgage loans although it is renewing
existing loans in its portfolio in selected cases. The Company annually
estimates the current loan-to-value ratios of its commercial mortgage loans
based on an analysis of the operating statements of each mortgaged property.

79
<PAGE>

The following table sets forth the maturity and principal repayment schedule
for the commercial mortgage loan portfolio as of September 30, 1996:

COMMERCIAL MORTGAGE LOAN SCHEDULED
PRINCIPAL REPAYMENTS

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
---------------------------------------------------------------
MATURITY PAYMENTS ALL OTHER LOAN ANNUAL
YEAR ON BALLOON LOANS PAYMENTS TOTAL % OF TOTAL
- ------------------------------------------- ------------------- ----------------- --------- ------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
1996....................................... $ 20.4 $ 1.3 $ 21.7 8.0%
1997....................................... 60.8 7.7 68.5 25.3
1998....................................... 5.5 7.3 12.8 4.7
1999....................................... 14.9 7.1 22.0 8.2
2000-2015.................................. 105.0 40.5 145.5 53.8
------- ----- --------- -----
Total...................................... $ 206.6 $ 63.9 $ 270.5 100.0%
------- ----- --------- -----
------- ----- --------- -----
</TABLE>

As of September 30, 1996, only $5.2 million, or 1.9% ($2.4 million, or 0.9%,
after giving effect to the Capital Contribution), of the Company's loan
portfolio (as measured by principal balance) was classified as delinquent or in
foreclosure. As of the same date, only $11.8 million, or 4.3% ($8.9 million, or
3.4%, after giving effect to the Capital Contribution), of the Company's loan
portfolio (as measured by principal balance) was classified as restructured. For
the first nine months of 1996, the Company's foreclosures were approximately
$6.2 million (as measured by principal balance).

In November 1994, in a transaction approved by the Iowa Commissioner, the
Company securitized a pool of 89 fixed rate commercial/multifamily mortgage
loans with a then outstanding aggregate principal balance of approximately $158
million. The Company sold these mortgage loans to a trust. Several classes of
Commercial/Multifamily Mortgage Pass-Through Certificates, Series 1994-1 (the
"Certificates") representing undivided beneficial ownership interests in the
trust were then issued and sold in a private placement. The Company retained a
residual interest in the trust which had a carrying value as of September 30,
1996 of $3.7 million. The primary purpose of this securitization was to convert
the mortgage loans into cash, which could then be reinvested, and fixed maturity
securities so as to enhance the Company's liquidity, overall investment quality
and long-term economic value.

EQUITY REAL ESTATE. In recent years the Company has significantly reduced
its equity real estate portfolio. As of September 30, 1996, investment real
estate consisted of 22 properties located in eight states. The carrying value of
investment real estate as of September 30, 1996 was $18.8 million (there is no
equity real estate in the portfolio after giving effect to the Capital
Contribution). As of September 30, 1996, the Company's rental properties were
89% occupied by third parties or by the Company.

OTHER. The Company held $229.3 million of policy loans on individual
insurance products as of September 30, 1996. Of these policy loans, 69.6% were
on traditional life policies and 30.4% were on universal life policies and
annuities. Policy loans are permitted to the extent of a policy's contractual
limits and are fully collateralized by policy cash values. Loan rates are fixed
in the contracts and range from 5.2% to 8.0%.

As of September 30, 1996, the Company held equity securities of $90.1
million (primarily preferred stock). The largest holding of equity securities
had a carrying value of $12.2 million as of September 30, 1996.

The Company held $74.5 million of other invested assets (including
short-term investments) on September 30, 1996. Other invested assets included
various joint venture investments, financial instruments and goodwill booked in
connection with the Company's investment in the Ameritas Joint Venture. See Note
13 to "Consolidated Financial Statements."

80
<PAGE>
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,
claims-paying 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.

FEDERAL INCOME TAX CONSIDERATIONS

Certain of the life insurance products and annuities marketed and issued by
AmerUs Life and the Ameritas Joint Venture enjoy income tax advantages as
compared to other savings investments, such as certificates of deposit and
taxable bonds. One important tax advantage is the deferral of income taxation on
any increases in the contract values during the accumulation phase of the life
insurance and annuities in contrast to the current taxation of all earnings on
many other savings and investment products. In the event that the federal income
tax laws are changed so that accumulated earnings on these life insurance
policies and annuities do not enjoy the tax deferral described above, or so that
additional savings and investment products achieve similar tax deferral status,
or so that tax rates are significantly lower so that the policyowner's or
annuitant's ability to defer income tax on policy or annuity earnings is no
longer a significant factor for the policyowner, consumer demand for the
affected products could decline materially. From time to time, Congress has
considered proposals to revise or eliminate this tax deferral. There is no such
proposal currently pending in Congress, nor has the current administration
announced any consideration of any such proposal. If legislation were enacted to
eliminate the tax advantages of life insurance policies and annuities, such a
change could have an adverse effect on the ability of the Company to sell those
products.

EMPLOYEES

As of September 30, 1996, the Company had 407 full-time employees. None of
the Company's employees are covered by a collective bargaining agreement and the
Company believes that its relations with employees are satisfactory.

Certain employees of the Company also provide services to other affiliated
entities, including affiliates not directly owned by the Company. See "Certain
Transactions and Relationships."

SUBSIDIARIES

The Company was formed in August, 1996 in connection with the
Reorganization. See "The Reorganization and Distribution of the Non-Life
Insurance Subsidiaries." AmerUs Life has three wholly-owned subsidiaries: CLA
Assurance Company, an Iowa life insurance company, Centralife Annuity Services,
Inc., an Arizona corporation, and American Vanguard Life Insurance Company, an
Iowa life insurance company. In addition, AmerUs Life currently owns a 34%
interest in AMAL Corporation, through whose wholly-owned subsidiaries the
Ameritas Joint Venture operates. See "--Ameritas Joint Venture."

LEGAL PROCEEDINGS

81
<PAGE>

life insurance policies which were underwritten and sold by AmerUs Life within
Texas and which were based upon uniform sales presentations and policy
illustrations from and after 1980 using a "vanishing premium" concept. AmerUs
Life has denied the allegations contained in such complaint, including the
existence of a legitimate class. The litigation is in the discovery stage and a
hearing on certification of the class is currently scheduled to occur in
December 1996. The litigation is being vigorously defended by AmerUs Life. The
parties are engaged in court-ordered mediation with respect to this action.

A class action lawsuit was also filed in June 1996 in the United States
District Court for the Northern District of California. The complaint alleges
that AmerUs Life improperly passed an increase in its corporate income taxes
(known as the deferred acquisition cost, or DAC, tax) through to policyowners in
breach of the terms of certain of its life and annuity policies. The plaintiff,
an insured under a universal life policy issued by Central Life, seeks
unspecified damages and injunctive relief on behalf of himself and all
policyowners of AmerUs Life with universal life, term and "blended" life
insurance policies and annuities. AmerUs Life has denied the allegations
contained in such complaint, including the existence of a legitimate class. The
litigation is in the early discovery stage and a hearing on certification of the
class has not yet been scheduled. The litigation is being vigorously defended by
AmerUs Life.

While the class action lawsuits are being vigorously defended, there can be
no assurance that such lawsuits will not have a material adverse effect on the
life insurance industry generally or on the Company. See "Risk Factors--Risks of
Class Action Litigation."

In the ordinary course of business, the Company and its subsidiaries are
also engaged in certain other litigation, none of which management believes is
material.

PROPERTIES

The Company's principal business operations are conducted from two
locations. The Company's executive offices consist of approximately 20,000
square feet located at 418 Sixth Avenue, Des Moines, Iowa. AmerUs Life's
executive offices consist of approximately 125,000 square feet located at 611
Fifth Avenue, Des Moines, Iowa. The Company and AmerUs Life will both lease
their executive offices from API after the Capital Contribution has been
effected, as both properties will be part of the Capital Contribution. See
"Certain Transactions and Relationships."

82
<PAGE>
SUPERVISION AND REGULATION

REGULATION OF THE COMPANY AND AMHC

A mutual insurance holding company is subject to regulation at a level
substantially equal to that of an Iowa domestic insurance company, and is
governed by statutory and regulatory requirements which are identical to, or
which parallel, the regulatory requirements imposed upon Iowa domestic insurance
companies. The Iowa Commissioner has jurisdiction over an intermediate holding
company, such as the Company, as if it were a mutual insurance holding company.

AMHC and the Company are each subject to the Iowa Insurer Supervision,
Rehabilitation and Liquidation Act, Iowa Code Chapter 507C. In addition, AMHC
and the Company are subject to the provisions of the Iowa Insurance Holding
Company Systems Act in the same manner and to the same extent as domestic
insurance companies. In addition, the assets of AMHC and the Company are
available to satisfy claims of policyowners, in the same manner as a domestic
insurance company in the event the Iowa Commissioner initiates a proceeding
under Chapter 507C.

AMHC and the Company may not merge with, be acquired by or acquire another
entity without approval of the Iowa Commissioner. In addition, in the case of a
merger or consolidation, separate approval by the Iowa Attorney General is
required. The statutory provisions applicable to the demutualization of a
domestic mutual life insurance company are applicable to the demutualization of
a mutual insurance holding company. In addition, no person may acquire or make
an offer to acquire voting stock in the Company if such acquisition would result
in such person's obtaining control over the Company. Generally, any person who,
directly or indirectly, owns, controls, holds with the power to vote, or holds
proxies representing 10% or more of the Company's voting securities (consisting
of both Class A Common Stock and Class B Common Stock) is deemed to have
control.

Under rules adopted by the Iowa Commissioner, AMHC is required to provide to
the Iowa Division of Insurance an annual report containing historical and
prospective information, including financial statements, an investment plan
covering all assets, any intention it has of borrowing money and information
regarding any "closed block" formed as part of a reorganization.

In addition to rules establishing the terms and conditions pursuant to which
the Iowa Commissioner will approve the sale of stock of an intermediate
insurance holding company or a subsidiary stock insurance company resulting from
a reorganization pursuant to Iowa law, the Iowa Commissioner has adopted rules
that also limit the activities and affiliations that are permissible for mutual
insurance holding companies. Under such rules, among other things, (i) at least
50 percent of the GAAP net worth of the mutual insurance holding company must be
invested in insurance company subsidiaries; (ii) a mutual insurance holding
company may not pay any policy credit, dividend or other distribution to any
policyowner member unless such payment has been approved by the Iowa
Commissioner; and (iii) a mutual insurance holding company must obtain the
approval of the Iowa Commissioner for any merger or acquisition (if at any time
it acquires or plans to acquire more than 50 percent of a stock insurance
company, a mutual insurance holding company must submit to the Iowa Commissioner
a plan describing any membership interests of policyowners).

The Iowa Commissioner also has proposed rules which would require prior
approval by the Iowa Commissioner of the issuance of stock by the Company.
Pursuant to such proposed rules, the Company intends to file an application with
the Iowa Commissioner seeking approval for the Offerings, which approval must be
obtained prior to consummation of the Offerings. Under the proposed rules, the
Company would be required to give notice to the Iowa Commissioner prior to any
subsequent public or private common stock offering.

Shares of the capital stock of the Company which carry the right to cast a
majority of the votes entitled to be cast by all of the outstanding shares of
the Company are required by Iowa law to at all times be owned, directly or
indirectly, by AMHC and may not be conveyed, transferred, assigned, pledged,
subjected to a security interest or lien, encumbered, or otherwise hypothecated
or alienated by AMHC or any intermediate holding company. Any conveyance,
transfer, assignment, pledge, security interest,

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lien, encumbrance or hypothecation or alienation by AMHC, or any intermediate
holding company, in or on such shares shall be deemed void in inverse
chronological order of the date of such transaction to the extent necessary to
give the mutual insurance holding company unencumbered direct or indirect
ownership of shares representing a majority of the votes entitled to be cast by
all of the outstanding shares of the Company.

REGULATION OF AMERUS LIFE

The Company will rely primarily on dividends and interest income from AmerUs
Life to make any dividend payments to its shareholders. The ability of AmerUs
Life to pay dividends to the Company is limited by law to earned profits
(statutory unassigned surplus) as of the date the dividend is paid, as
determined in accordance with accounting practices prescribed or permitted by
the insurance regulatory authorities of the State of Iowa. In addition, under
the Iowa Insurance Holding Company Systems Act, AmerUs Life may not pay an
"extraordinary" dividend without prior notice to and approval by the Iowa
Commissioner. An "extraordinary" dividend is defined under the Iowa Holding
Company Systems Act as any dividend or distribution of cash or other property
whose fair market value, together with that of other dividends or distributions
made within the preceding 12 months exceeds the greater of (i) 10% of
policyowners' surplus (total statutory capital stock and STATUTORY SURPLUS) as
of December 31 of the preceding year, or (ii) the statutory net gain from
operations of the insurer for the 12 month period ending the December 31 of the
preceding year. Iowa law gives the Iowa Commissioner broad discretion to
disapprove requests for dividends in excess of these limits. Based on this
limitation and 1995 statutory results, AmerUs Life would be able to pay
approximately $40 million in dividends to the Company in 1996 without obtaining
the Iowa Commissioner's approval. However, as a result of the Distribution,
AmerUs Life will not be able to pay any additional dividends to the Company in
the 12-month period following the Distribution without the prior consent of the
Iowa Commissioner.

AmerUs Life and its subsidiaries are subject to regulation and supervision
by the states in which they 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
premium rates for some lines of business, establishing reserve requirements,
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 AmerUs Life is licensed administers a guaranty fund,
which provides for assessments of licensed insurers for the protection of
policyowners of insolvent insurance companies. There has been an increase in the
number of insurance companies that are under supervision which has resulted in
an increase in the amount of assessments to cover losses to policyowners of such
companies. Assessments can be partially recovered through a reduction in future
premium taxes in some states. In these situations, the assessments are generally
capitalized and amortized against future reductions in premium taxes. Net
assessment expenses for AmerUs Life amounted to $0.4 million for the first nine
months of 1996, $0.4 million in 1995, $1.2 million in 1994 and $3.3 million in
1993. Management cannot reasonably predict the amount of future assessments, if
any.

Ethical sales practices and compliance with applicable laws and regulations
relevant to the life insurance industry have been a continuing focus of the
Company's support efforts. The Company has a continuing education program
focusing on ethical practices which is being provided to all agents. A program
is currently being implemented to further formalize the Company's current
practices and standards in the compliance and market conduct areas.

Recently, the insurance regulatory framework has been placed under increased
scrutiny by various states, the federal government and the NAIC. Various states
have considered or enacted legislation which changes, and in many cases
increases, the state's authority to regulate insurance companies. Although
legislation has been under consideration for several years in Congress which, if
enacted, would result in the federal government assuming some role in the
regulation of insurance companies, management does not expect the current
Congress to enact federal insurance regulation. The NAIC, in

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conjunction with state regulators, has been reviewing existing insurance laws
and regulations. The NAIC recently approved and recommended to the states for
adoption and implementation several regulatory initiatives designed to reduce
the risk of insurance company insolvencies. Through the NAIC accreditation
program, these recommendations for state legislation have taken on an increased
significance. Two such initiatives are risk-based capital standards ("RBC")
which have been adopted by the NAIC, and a model investment law which is
currently under consideration.

The RBC standards for life insurance companies were adopted by the 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. 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.

The RBC requirements are intended to be used by insurance regulators as an
early warning tool to identify deteriorating or weakly capitalized companies for
the purpose of initiating regulatory actions. They are not designed as a ranking
mechanism for adequately capitalized companies. In addition, the formula defines
a new minimum capital standard which supplements the low, fixed minimum capital
and surplus requirements previously implemented on a state-by-state basis.

The Iowa RBC requirements categorize insurance companies according to the
extent to which they meet or exceed certain RBC thresholds. The law requires
increasing degrees of regulatory oversight and intervention based on the level
of an insurance company's authorized control level RBC as its RBC declines.
These degrees of regulatory action are triggered by the RBC level of an
insurance company as follows: (i) a "Company Action Level Event" (requiring the
insurance company to inform and obtain approval from the Director of a
comprehensive financial plan for increasing its RBC), which would occur if,
among other things, an insurance company's RBC falls below 200% of its
authorized control level RBC, or if an insurance company's RBC falls below 250%
of its authorized control level RBC and has a negative trend; (ii) a "Regulatory
Action Level Event" (resulting in, in addition to the requirement of a financial
plan, regulatory actions including examination of an insurance company's assets,
liabilities and operations followed by an order specifying such corrective
actions as the Director determines to be appropriate), which would occur if,
among other things, an insurance company's RBC falls below 150% of its
authorized control level RBC; (iii) an "Authorized Control Level Event"
(resulting in, in addition to the regulatory actions above, such actions as are
necessary to cause an insurance company to be placed under regulatory control in
a rehabilitation or liquidation proceeding if deemed to be in the best interests
of policyowners, creditors and the public), which would occur if, among other
things, an insurance company's RBC falls below 100% of its authorized control
level RBC; and (iv) a "Mandatory Control Level Event" (resulting in, on a
mandatory basis, such actions as are necessary to cause an insurance company to
be placed under regulatory control in a rehabilitation or liquidation
proceeding), which would occur if, among other things, an insurance company's
RBC falls below 70% of its authorized control level RBC.

As of September 30, 1996, AmerUs Life's RBC levels were significantly in
excess of RBC thresholds. Management believes that the RBC levels will be
significantly in excess of RBC thresholds as of the closing of the Offerings. As
a result, the RBC requirements are not expected to have an impact upon AmerUs
Life's operations, financial condition or operating results.

Approximately once every three to five years, as part of their routine
regulatory oversight process, state insurance departments conduct detailed
examinations of the books, records and accounts of insurance companies domiciled
in their states. Such examinations are generally conducted in cooperation with
the departments of two or three other states, under guidelines promulgated by
the NAIC. AmerUs Life was last examined by the Iowa Commissioner as of December
31, 1993. No material issues were raised by the Iowa Commissioner in such
examination.

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A committee of the NAIC is developing model legislation to govern insurance
company investments. Several discussion drafts have been released over the past
two to three years. However, implementation of any investment model law is not
anticipated in the foreseeable future. Management believes that if the current
discussion draft were adopted without modification it would not have a material
impact on the Company.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning the current
directors and executive officers of the Company and AmerUs Life.

<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY AND AMERUS LIFE
- ------------------------------ --- ---------------------------------------------------------------------------
<S> <C> <C>
John R. Albers 65 Director
Roger K. Brooks 59 Director, Chairman, President and Chief Executive Officer of the Company
and Chairman of AmerUs Life
Malcolm Candlish 61 Director
D T Doan 64 Director and Vice Chairman of the Company and President of AmerUs Life
Thomas F. Gaffney 51 Director
Sam C. Kalainov 66 Director
John W. Norris, Jr. 60 Director
Jack C. Pester 61 Director
John A. Wing 61 Director
Thomas C. Godlasky 41 Executive Vice President and Chief Investment Officer of the Company and
AmerUs Life
Michael E. Sproule 49 Executive Vice President and Chief Financial Officer of the Company and
AmerUs Life
Victor N. Daly 53 Senior Vice President and Chief Human Resources Officer of the Company and
AmerUs Life
Michael G. Fraizer 46 Senior Vice President and Controller/Treasurer of the Company and AmerUs
Life
</TABLE>

Set forth below with respect to each of the directors and executive officers
of the Company and AmerUs Life is a description of such individual's business
experience, principal occupation and employment during at least the last five
years:

John R. Albers served as a director of American Mutual Life from November
1983 to June 1996. Since April 1996 Mr. Albers has served as a director of AMAL.
Mr. Albers is President and Chief Executive Officer of Fairfield Enterprises,
Inc., Dallas, Texas. From August 1988 to April 1995, Mr. Albers was the
Chairman, Chief Executive Officer & President of Dr. Pepper/Seven-Up Companies,
Dallas, Texas. From July 1995 to the present, Mr. Albers has served as a
director of First Alert, Inc., Aurora, Illinois. Mr. Albers also serves as a
director of AMHC.

Roger K. Brooks served as a director of American Mutual Life from February
1971 to June 1996. Mr. Brooks was the Chief Executive Officer of American Mutual
Life from December 1994 to June 1996, and prior thereto was the Chairman and
Chief Executive Officer of American Mutual Life. Since April 1996 Mr. Brooks has
served as a director of AMAL. Mr. Brooks also serves as a director of AMHC.

Malcolm Candlish served as a director of American Mutual Life from February
1987 to June 1996. Since December 1992 Mr. Candlish has been the Chairman and
Chief Executive Officer and, since May 1996, the President of First Alert, Inc.,
Aurora, Illinois. From 1989 to 1992, Mr. Candlish was the

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Chairman and Chief Executive Officer of Sealy, Inc., Cleveland, Ohio. Since 1991
Mr. Candlish has served as a director of Black & Decker Corporation, Towson,
Maryland. Mr. Candlish also serves as a director of AMHC.

D T Doan served as a director and Vice Chairman of American Mutual Life from
December 1994 to June 1996. From October 1995 until June 1996, Mr. Doan was
President--Insurance Operations of American Mutual Life. Mr. Doan held the same
position from August 1992 to January 1995. From August 1987 to August 1992, Mr.
Doan was Executive Vice President--Corporate of American Mutual Life. Since
April 1996 Mr. Doan has served as a director of AMAL, AVLIC and AIC. Since April
1996, Mr. Doan has served as Executive Vice President of AMAL and AVLIC and
Senior Vice President of AIC. Mr. Doan also serves as a director of AMHC.

Thomas F. Gaffney served as a director of American Mutual Life from November
1983 to June 1996. Mr. Gaffney is a private investor who lives in Tierra Verde,
Florida. From 1987 to 1990, Mr. Gaffney was the Chairman of Oxford Investment
Group, Bloomfield Hills, Michigan. Mr. Gaffney also serves as a director of
AMHC.

Sam C. Kalainov served as a director of American Mutual Life from December
1994 to June 1996. Mr. Kalainov was the Chairman of American Mutual Life from
December 1994 until June 1996 and Chairman of AmerUs Life from July 1996 until
September 1996. From 1982 to December 1994, Mr. Kalainov was a director,
Chairman and Chief Executive Officer of Old AML. Mr. Kalainov also serves as a
director of AMHC.

John W. Norris, Jr. served as a director of American Mutual Life from
November 1974 to June 1996. Mr. Norris is Chairman and Chief Executive Officer
of Lennox International, Inc., Dallas, Texas. Mr. Norris has also served as a
director of Atmos Energy Corporation, Dallas, Texas since August 1987. Mr.
Norris also serves as a director of AMHC.

Jack C. Pester served as a director of American Mutual Life from December
1994 to June 1996. From May 1981 to December 1994, Mr. Pester was a director of
Old AML. Mr. Pester is a Senior Vice President of The Coastal Corporation,
Houston, Texas. Since August 1994 Mr. Pester has also served as a director of
KFX, Inc., Denver, Colorado. Mr. Pester also serves as a director of AMHC.

John A. Wing served as a director of American Mutual Life from May 1991 to
June 1996. Mr. Wing is Chairman and Chief Executive Officer of The Chicago
Corporation, Chicago, Illinois.

Thomas C. Godlasky was Executive Vice President and Chief Investment Officer
of American Mutual Life from January 1995 to June 1996. From February 1988 to
January 1995, he was Manager of the Fixed Income and Derivatives Department of
Providian Corporation, Louisville, Kentucky. Since April 1996, Mr. Godlasky has
served as a director of AVLIC and AIC.

Michael E. Sproule was Executive Vice President and Chief Financial Officer
of American Mutual from August 1992 to June 1996. From January 1991 through July
1992, he was Executive Vice President and Chief Financial Officer of ICH
Corporation, Louisville, Kentucky and from January 1988 to December 1990, he was
a Consultant with Tillinghast, New York, New York. Since April 1996, Mr. Sproule
has served as a director of AVLIC and AIC.

Victor N. Daly was Senior Vice President and Chief Human Resources Officer
of American Mutual Life from September 1995 to June 1996. From April 1989 to
September 1995 Mr. Daley was Senior Vice President and Chief Administrative
Officer of Royal Insurance, Charlotte, North Carolina.

Michael G. Fraizer was Senior Vice President and Controller/Treasurer of
American Mutual Life from January 1993 to June 1996. From April 1991 to January
1993, Mr. Fraizer was Senior Vice President and Chief Financial Officer of Iowa
Realty Co., Inc. and from April 1977 to April 1991, he was a Partner with
McGladrey & Pullen, Des Moines, Iowa.

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<PAGE>
BOARD OF DIRECTORS OF THE COMPANY

The business of the Company is managed under the direction of the Company's
Board of Directors. The Board of Directors is presently composed of nine
directors and the Company intends to add two additional outside directors after
completion of the Offerings. The Board is divided into three classes. Messrs.
Candlish, Kalainov and Norris are in Class I, which class will stand for
election at the annual meeting of shareholders to be held in 1997. Messrs.
Albers, Doan and Gaffney are in Class II, which class will stand for election at
the annual meeting of shareholders to be held in 1998. Messrs. Brooks, Pester
and Wing are in Class III, which class will stand for election at the annual
meeting of shareholders to be held in 1999.

Consistent with proposed regulations recently promulgated by the Iowa
Commissioner, at least three of the Company's outside directors (including Mr.
Wing) will not be directors of AMHC or any of AMHC's subsidiaries. In addition,
at least two of the Company's outside directors, who have not yet been selected,
will have had no previous affiliation with the Company. The Company's
independent directors will review any intercompany transactions involving
potential conflicts of interest between the Company and AMHC and its
subsidiaries. At present, all of the members of the Company's Board of Directors
are outside directors except Messrs. Brooks, Doan and Kalainov.

The Company's Board of Directors has also established an Executive Committee
which will consist of between three and five members of the Board and will be
chaired by Mr. Brooks. The Executive Committee exercises the power and authority
of the Directors in all matters that do not require action by the entire Board
of Directors. The members of the Executive Committee will be appointed prior to
the Offerings.

The Company's Board of Directors has also established an Audit Committee and
a Human Resources Committee. The Audit Committee recommends the firm to be
appointed as independent accountants to audit financial statements and to
perform services related to the audit, reviews the scope and results of the
audit with the independent accountants, reviews with management and the
independent accountants the Company's year-end operating results and considers
the adequacy of the Company's internal accounting procedures. The Audit
Committee consists of Messrs. Wing, Gaffney and Pester. The Human Resources
Committee reviews and recommends the compensation arrangements for all executive
officers, approves such arrangements for other senior level employees, and takes
such actions as may be required in connection with certain compensation and
incentive plans of the Company. The Human Resources Committee consists of
Messrs. Albers, Candlish and Norris, each of whom qualifies as a Non-Employee
Director, as such term is used in Rule 16b-3 promulgated under the Securities
Exchange Act of 1934.

BOARD OF DIRECTORS OF AMERUS LIFE

The Board of Directors of AmerUs Life is presently composed of the same nine
directors as the Company.

COMPENSATION OF DIRECTORS

It is currently contemplated that all non-employee directors will receive an
annual retainer of $15,000 plus a $2,000 fee for special meetings of the Board
of Directors or a committee thereof. Directors who are officers or employees of
the Company or any affiliate of the Company receive no compensation for serving
as directors. All directors are reimbursed for out-of-pocket expenses incurred
in connection with attendance at any meeting of the Board of Directors or
committee of the Board of Directors of the Company or AmerUs Life.

Directors are also eligible to participate in the Company's Non-Employee
Director Stock Plan, which the Company's Board of Directors approved on
September 15, 1996. See "Management Compensation--Compensation Pursuant to Stock
Plans of the Company."

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MANAGEMENT COMPENSATION

EXECUTIVE OFFICER COMPENSATION

Since the formation of the Company, none of the executive officers has
received any compensation from the Company. All compensation received, earned or
accrued by such executive officers has been from AmerUs Life.

The following summary compensation table sets forth certain information
concerning compensation for services rendered in all capacities awarded or paid
by the Company (including compensation paid by AmerUs Life) to its Chief
Executive Officer and the other named executive officers (the "Named Executive
Officers") during the year ended December 31, 1995:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------- LTIP ALL OTHER
SALARY BONUS(A) PAYOUTS(B) COMPENSATION(C)
NAME AND PRINCIPAL POSITION FISCAL YEAR $ $ $ $
- ------------------------------------------------- ----------- --------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
Roger K. Brooks
Chairman, President and Chief Executive Officer
of the Company and Chairman of AmerUs Life 1995 440,000 300,000 352,000
D T Doan
Vice Chairman of the Company and President of
AmerUs Life 1995 275,000 132,500 137,600
Thomas C. Godlasky
Executive Vice President and Chief Investment
Officer of the Company and AmerUs Life 1995 239,600 125,000 204,000(D)
Michael E. Sproule
Executive Vice President and Chief Financial
Officer of the Company and AmerUs Life 1995 250,000 200,000 125,000
Sam C. Kalainov
Former Chairman (E) 1995 440,000 300,000 352,000
</TABLE>

- ------------------
(A) Pursuant to the Management Incentive Plan.

(B) Long term incentive compensation pursuant to the Performance Share Plan (the
"LTIP"). LTIP payouts indicated were earned in 1995 and are payable in 1996.

(D) The amount shown reflects payment of a $204,000 sign-on bonus of which a
pro-rata portion is repayable in the event of termination during the initial
36 months of employment.

(E) Mr. Kalainov served as Chairman of AmerUs Life until September 1996. In
August 1996, Mr. Kalainov became Chairman of AMHC and AmerUs Group. Mr.
Kalainov is no longer an officer of the Company.

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<PAGE>
COMPENSATION PURSUANT TO STOCK PLANS OF THE COMPANY

STOCK INCENTIVE PLAN

On September 15, 1996, the Company's Board of Directors adopted the AmerUs
Life Holdings, Inc. Stock Incentive Plan (the "Stock Plan" or the "Plan"). The
purpose of the Stock Plan is to enable the Company to attract and retain
employees who will contribute to the Company's long-term success by enabling
such employees to participate in the long-term success and growth of the Company
through an equity interest in the Company.

The Stock Plan provides for the grant of options (including incentive stock
options and non-qualified stock options), stock appreciation rights and
restricted stock awards. To date, no options or other awards have been granted
under the Stock Plan. In addition, consistent with proposed rules recently
promulgated by the Iowa Commissioner, no options or awards will be granted by
the Company during the six-month period following the closing of the Offerings.

The summary of the Stock Plan which appears below is qualified in its
entirety by reference to the full text of such Plan.

TYPES OF AWARDS. The Stock Plan provides for the grant of any or all of the
following types of awards: (1) stock options, including incentive stock options
and non-qualified stock options; (2) stock appreciation rights; and (3)
restricted stock. Awards may be granted in combination as determined by the
Human Resources Committees of the Board of Directors (the "Committee"). The
initial grant will be in the form of Non-Qualified Stock Options.

TERM. The Company anticipates that the Stock Plan will be approved by the
Company's sole shareholder and become effective prior to the closing of the
Offerings. The Stock Plan will terminate ten years after its effective date (the
"Termination Date"). No awards shall be granted pursuant to the Plan after the
Termination Date, but awards granted prior thereto may extend beyond such time.
The Board of Directors may terminate the Plan prior to the Termination Date,
however, termination of the Plan will not affect awards made prior to
termination.

ELIGIBILITY. Officers and other key and high potential employees of the
Company, its affiliates and its subsidiaries (but excluding members of the
Committee and any person who serves only as a director) who are responsible for
or contribute to the management, growth and/or profitability of the business of
the Company are eligible to be granted stock options, stock appreciation rights,
or restricted stock awards. The options and participants under the Plan will be
selected from time to time by the Committee, in its sole discretion, from among
those eligible, and the Committee shall determine, in its sole discretion, the
number of shares covered by each award or grant.

SHARES SUBJECT TO THE STOCK PLAN. The total number of shares of Class A
Common Stock reserved and available for distribution under the Stock Plan shall
be 1.4 million. Such shares may consist, in whole or in part, of authorized and
unissued shares or treasury shares. If any shares of Class A Common Stock that
have been optioned cease to be subject to option, or if any shares subject to
Restricted Stock Award granted hereunder are forfeited or such awards otherwise
terminate, such shares shall again be available for distribution in connection
with future awards under the Plan. The maximum total number of shares subject to
awards which may be granted under the Plan in any one year will be 700,000, and
the maximum number of shares subject to awards which may be granted under the
Plan to any individual in any one year is 230,000 (in both cases, subject to
appropriate adjustments to reflect changes in capitalization of the Company).

STOCK OPTIONS. The Committee is authorized to determine the terms and
conditions of all option grants, subject to the limitations that the option
price per share may not be less than the fair market value of a share of the
Company's common stock on the date of grant and the term of an option may not be
longer than ten (10) years. Payment of the option price may be made in any
manner specified by the Committee (which may include cash or common stock of the
Company, or by "cashless exercise").

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STOCK APPRECIATION RIGHTS ("SARS"). The Committee is authorized to grant
SARs in tandem with options under the Stock Plan. An SAR can be exercised only
to the extent the options 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. Upon exercise of an SAR, the holder will be entitled to receive, for
each share with respect to which the SAR is exercised, an amount (the
"appreciation") equal to the difference between the option price of the related
option and the fair market value of a share of common stock of the Company on
the date of exercise of the SAR. The appreciation will be payable in cash or
Class A Common Stock, at the discretion of the Committee.

RESTRICTED STOCK. The Committee is authorized to award restricted stock
under the Stock Plan subject to the terms and conditions as the Committee may
determine. The Committee has the authority to determine the number of shares of
restricted stock to be awarded, the price, if any, to be paid by the recipient
of the restricted stock, and the date or dates on which the restricted stock
will vest. The vesting of restricted stock may be conditioned upon the
completion of a specific period of service with the Company, upon the attainment
of specified performance goals, or upon such other criteria as the Committee may
determine. The Stock Plan gives the Committee discretion to make loans to the
recipients for the purchase price of restricted stock and to accelerate the
vesting of restricted stock on a case by case basis at any time.

FEDERAL INCOME TAX ASPECTS. The following is a brief summary of the Federal
income tax consequences of awards made under the Stock Plan. This summary does
not describe state, local or foreign tax consequences. The information contained
in this section is based on present law and regulations, which are subject to be
changed prospectively or retroactively.

The optionee will recognize no taxable income upon the grant or exercise of
an incentive stock option (as defined under the Plan), and the Company will not
be entitled to any deduction. Upon a disposition of the shares after the later
of two years from the date of grant and one year from the date of exercise, the
participant will recognize long-term capital gain or loss equal to the
difference, if any, between the amount realized and the exercise price. The
excess, if any, of the fair market value of the shares of Class A Common Stock
on the date of exercise of the Incentive Stock Option over the exercise price
may be subject to alternative minimum tax. In such circumstances, no deduction
will be allowed to the Company for Federal income tax purposes.

If Class A Common Stock acquired upon the exercise of an Incentive Stock
Option is disposed of prior to the expiration of the holding periods described
above, (i) the optionee will recognize ordinary compensation income in the
taxable year of disposition in an amount equal to the excess, if any, of the
lesser of the fair market value of the shares on the date of exercise and the
amount realized on the disposition of the shares, over the exercise price paid
for such shares; and (ii) the Company will be entitled to a corresponding
deduction.

With respect to Non-Qualified Options (as defined under the Plan) (i) upon
grant of the option, the optionee will recognize no income; and (ii) upon
exercise of the option, the optionee will recognize ordinary compensation income
in an amount equal to the excess, if any, of the fair market value of the shares
on the date of exercise over the exercise price, and the Company will be
entitled to a corresponding deduction. On the disposition of the shares, the
optionee will recognize gain or loss equal to the amount realized and the sum of
the exercise price and the ordinary compensation income realized. Such gain or
loss will be treated as either short-term or long-term capital gain or loss,
depending upon the length of time that the optionee has held the shares.

An optionee recognizes no taxable income upon the grant of a SAR, and the
Company is not entitled to a deduction. An optionee will recognize ordinary
income, and the Company will be entitled to a deduction at the time of exercise
equal to the cash or fair market value of common stock payable upon such
exercise.

The grant of Restricted Stock (as defined under the Plan) under the Stock
Plan will not result in income for the grantee or in a deduction for the
Company, assuming the shares transferred are subject

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to a "substantial risk of forfeiture" as intended by the Company. If there are
no such restrictions, the grantee would recognize ordinary income upon receipt
of shares. Dividends paid to the grantee while the stock remains subject to
restriction will be treated as compensation for Federal income tax purposes. At
the time the restrictions lapse, the grantee will recognize ordinary income, and
the Company will be entitled to a deduction measured by the fair market value of
the shares at the time of lapse. However, an optionee may elect to recognize
income measured by the fair market value of the shares at the time of grant and
the Company will be entitled to a corresponding deduction.

Awards paid to certain executive officers may be subject to the limitations
under Section 162(m) of the Internal Revenue Code that prohibit the deduction of
certain compensation paid in excess of $1,000,000 in any taxable year. The
application of such section to awards made under plans adopted and approved
prior to the time at which a company's stock becomes publicly traded is not
clear. The Company believes that compensation payable pursuant to options
granted under the Stock Plan should not be limited as to deductibility by reason
of Section 162(m) and that compensation payable in respect of other awards may
fail to be deductible for Federal income tax purposes unless such awards qualify
for certain exemptive relief that may be available for grants made prior to the
first meeting of shareholders of the Company at which directors are elected in
1999.

NON-EMPLOYEE DIRECTOR STOCK PLAN

On September 15, 1996, the Company's Board of Directors adopted the AmerUs
Life Non-Employee Director Stock Plan (the "Director Plan"). The Company
anticipates the Director Plan will be approved by the Company's sole shareholder
and become effective prior to the closing of the Offerings. The purpose of the
Director Plan is to provide stock-based compensation to eligible Directors of
the Company in order to encourage a high level of Director performance and to
provide Directors with a proprietary interest in the Company's success.

The Director Plan provides for grants of restricted shares of the Company's
Class A Common Stock ("Restricted Shares") and for the grant of options. To
date, no Restricted Shares or options have been granted. In addition, consistent
with proposed rules recently promulgated by the Iowa Commissioner, no Restricted
Shares or options will be granted under the Director Plan during the six-month
period following the closing of the Offerings.

The Director Plan is administered by the Committee. The total number of
shares of Class A Common Stock reserved and available for distribution under the
Director Plan shall be 150,000. Such shares may consist, in whole or in part, of
authorized and unissued shares or treasury shares.

Each Non-Employee Director of the Company is eligible to participate in the
Director Plan. A "Non-Employee Director" for this purpose means Directors who
are not officers for purposes of Section 16 of the Exchange Act or otherwise
employed, or a consultant to, the Company or any of its affiliates, and who is
an outside director under Section 1.162-27(e)(3) of the regulations promulgated
under the Code.

STOCK OPTIONS. Beginning January 1, 1998, options covering 2,500 shares of
Class A Common Stock of the Company shall be granted to each Non-Employee
Director automatically on the first day of each calendar year in which the Class
A Common Stock is publicly traded on the NASDAQ National Market. Options granted
under the Director Plan shall be evidenced by a written agreement in such form
as the Committee shall from time to time approve. The option price per share of
Class A Common Stock purchasable under an option shall be 100% of the fair
market value of the Class A Common Stock on the date of the grant of the option.
Each option shall be exercisable for a term of ten (10) years from the date such
option is granted. Options will not become exercisable until the expiration of
twelve (12) months from the date of the grant of the option.

RESTRICTED STOCK AWARDS. Each Non-Employee Director may elect, pursuant to
a written irrevocable election, to receive Restricted Stock in lieu of part or
all of such Non-Employee Director's director fees. The number of shares of
Restricted Stock granted to a Non-Employee Director pursuant to such

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election shall be equal to the dollar amount of director fees which the
Non-Employee Director has elected not to receive, divided by seventy-five
percent (75%) of the fair market value of the Class A Common Stock as of the
date of payment.

Generally, a Non-Employee will not be permitted to sell, transfer, pledge or
assign shares of Restricted Stock awarded under the Director Plan for a period
of two (2) years following the effective date of the Restricted Stock Agreement
pursuant to which such shares of Restricted Stock are awarded.

FEDERAL INCOME TAX ASPECTS. Federal income tax consequences of options and
Restricted Stock granted under the Director Plan are the same as those described
with respect to Non-Qualified Options and Restricted Stock under the Stock
Incentive Plan.

COMPENSATION PURSUANT TO AMERUS LIFE PLANS

MANAGEMENT INCENTIVE PLAN

AmerUs Life sponsors a Management Incentive Plan ("MIP") for officers and
key management employees of the Company and its subsidiaries. On an annual
basis, AmerUs Life establishes various and distinct goals for its executives and
key managers. Goals generally relate to objectives such as increased revenue,
expense levels and earnings. Attainment of individual and AmerUs Life goals can
generate payment of cash bonuses ranging from 15% to 70% of an executive's base
salary. Payment of these annual incentives is approved by the Board of Directors
and made in a separate lump-sum on or before the end of February of the ensuing
year.

LONG-TERM INCENTIVE COMPENSATION PLAN

AmerUs Life established a long-term incentive compensation Performance Share
Plan effective January 1, 1995 (the "LTIP"). Under the LTIP, the Human Resources
Committee of the Company's Board of Directors has the authority to grant
Performance Shares to eligible employees on such dates as the Human Resources
Committee shall determine. The LTIP will be integrated with the Stock Plan such
that long term compensation earned in connection with services provided to the
Company will be paid through the Stock Plan.

The Human Resources Committee determines the terms and conditions of the
Performance Share awards consistent with the LTIP. Each Performance Share has a
notional value of $100 and a maximum value of $200 at the end of the three-year
performance cycle to which the Performance Share relates (the "Performance
Cycle"). Performance goals are measured by the cumulative growth in AmerUs
Life's consolidated adjusted GAAP net worth ("Adjusted GAAP Value"), as
determined annually by the Human Resources Committee, and are set at a range of
levels for a given Performance Cycle. Goals are set to establish the level of
increase in Adjusted GAAP Value in the Performance Cycle that is required in
order for the value of the Performance Shares to reach its maximum level of $200
at the end of such Performance Cycle. Threshold levels are also set to establish
the level of increase in Adjusted GAAP Value in the Performance Cycle that is
required in order for the Performance Shares to maintain a value of $50 at the
end of such cycle. If threshold levels are not met, the Performance Shares will
have no value at the end of the Performance Cycle. Performance goals for a given
Performance Cycle under the LTIP are established at the time Performance Shares
are granted.

The first Performance Shares were awarded under the LTIP on January 1, 1995.
On such date, Performance Shares relating to three Performance Cycles were
awarded, one relating to the first full three-year Performance Cycle ending on
December 31, 1997, and the other two relating to two transitional one- and
two-year Performance Cycles ending on December 31, 1995 and December 31, 1996,
respectively. Performance Shares were also awarded on January 1, 1996 for the
three-year Performance Cycle ending on December 31, 1998.

The various performance goals set for the Performance Shares awarded on
January 1, 1995 and January 1, 1996 ranged from a minimum of 8% Adjusted GAAP
Value to 16% Adjusted GAAP Value. The

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increases in Adjusted GAAP Value necessary for the Performance Shares to reach
their maximum value for the Performance Cycles ending December 31, 1996, 1997
and 1998 are 15%, 16% and 16%, respectively.

LONG-TERM INCENTIVE PLANS - AWARDS
IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF NON-STOCK
SHARES, PERFORMANCE OR PRICE-BASED PLANS
UNITS OR OTHER PERIOD -----------------------------------
OTHER RIGHTS UNTIL MATURATION THRESHOLD TARGET MAXIMUM
(#) OR PAYOUT ($) ($) ($)
------------- ---------------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
Roger K. Brooks 1,760 1/95 - 12/95 88,000 176,000 352,000
2,640 1/95 - 12/96 132,000 264,000 528,000
3,520 1/95 - 12/97 176,000 352,000 704,000
D T Doan 688 1/95 - 12/95 34,400 68,800 137,600
1,031 1/95 - 12/96 51,550 103,100 206,200
1,375 1/95 - 12/97 68,750 137,500 275,000
Thomas C. Godlasky 625 1/95 - 12/95 31,250 62,500 125,000
938 1/95 - 12/96 46,900 93,800 187,600
1,250 1/95 - 12/97 62,500 125,000 250,000
Michael E. Sproule 625 1/95 - 12/95 31,250 62,500 125,000
938 1/95 - 12/96 46,900 93,800 187,600
1,250 1/95 - 12/97 62,500 125,000 250,000
Sam C. Kalainov 1,760 1/95 - 12/95 88,000 176,000 352,000
2,640 1/95 - 12/96 132,000 264,000 528,000
3,520 1/95 - 12/97 176,000 352,000 704,000
</TABLE>

SAVINGS AND PROFIT SHARING PLANS

Each of the Named Executive Officers participates in the All*AmerUs Savings
& Retirement Plan for Employees of American Mutual Life (the "Savings &
Retirement Plan"), a profit sharing plan containing a qualified cash or deferred
arrangement and the All*AmerUs Supplemental Executive Retirement Plan (the
"Supplemental Plan"). Each of the Named Executive Officers also has a frozen
benefit under either the American Mutual Life Insurance Company Employees'
Pension Plan (the "AML Employees' Frozen Pension Plan") or the American Mutual
Life Insurance (formerly Central Life Assurance) Company Pension Plan (the "AML
(formerly Central Life) Frozen Pension Plan") (the AML Employees' Frozen Pension
Plan and the AML (formerly Central Life) Frozen Pension Plan are hereinafter
sometimes collectively referred to as the "Frozen Pension Plans"). Certain of
the Named Executive Officers additionally have a frozen benefit under the
American Mutual Life Insurance Company Supplemental Executive Retirement Plan
(the "AML Frozen SERP").

SAVINGS & RETIREMENT PLAN

Prior to December 31, 1995, the Company maintained three separate defined
contribution plans for eligible employees (collectively the "AmerUs Life Former
Savings Plans"). Contributions under the AmerUs Life Former Savings Plans ceased
as of December 31, 1995 and effective January 1, 1996, the AmerUs Life Former
Savings Plans were merged into the Savings & Retirement Plan. The Company's and
API's aggregate contributions to the AmerUs Life Former Savings Plans were
approximately $568,943 in 1995.

The Savings & Retirement Plan is intended to be qualified under Sections
401(a) and 501(a) of the Internal Revenue Code (the "Code") and is administered
by the AmerUs Life Benefit and Pension Committee (the "Committee"), whose
members are appointed by the Board of Directors of AmerUs Life. The Committee is
responsible for interpreting the Savings & Retirement Plan, making certain
amendments thereto and adopting rules and regulations reasonably necessary or
advisable to implement and

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<PAGE>
administer the plan. The Savings & Retirement Plan allows for elective employee
before-tax contributions, a set level of basic and matching contributions to be
made by AmerUs Life and API, a discretionary level of profit-sharing
contributions and an individually-determined supplemental contribution, if
applicable.

Employee contributions are governed by Code Section 401(k). Participants may
elect to make before-tax contributions to the Savings & Retirement Plan that are
at least 1% and not more than 15% of the participant's compensation. The
Committee may reduce, suspend or refund the contribution of a "highly
compensated member" (as defined in the Savings & Retirement Plan) in order to
ensure compliance with the nondiscrimination tests set forth in the Savings &
Retirement Plan.

AmerUs Life will contribute 4% of each eligible participating employee's
compensation as of the end of a plan year in accordance with the provisions of
the Savings & Retirement Plan ("Basic Contributions"). In addition, AmerUs Life
will make a matching contribution of 125% of an employee's before-tax
contribution, up to a maximum of 4% of an employee's compensation ("Matching
Contributions").

AmerUs Life may also contribute, on behalf of each participating employee
who was, as of December 31, 1995, an active participant in either Frozen Pension
Plan, a certain percentage of such employee's compensation ("Interim Benefit
Supplement"), in order to make up any shortfall between the amount to which such
employee would have been entitled under either of the Frozen Pension Plans as
compared to such employee's projected benefits under the Savings & Retirement
Plan. The amount of the Interim Benefit Supplement made on behalf of any
eligible employee is reduced by any profit sharing contribution allocated to
such employee under the Savings & Retirement Plan.

The Savings & Retirement Plan is generally available to all full-time
employees of AmerUs Life. An employee's compensation, for purposes of
contributions based thereon, consists of an employee's W-2 compensation with
certain adjustments. All contributions made by AmerUs Life are made to the
participants' individual accounts and the Basic Contributions, Matching
Contributions, Profit-Sharing Contributions and the Interim Benefit Supplement
are subject to forfeiture until fully vested under the Savings & Retirement
Plan's vesting schedule. The amount of before-tax contributions made by a
participant and contributions made by AmerUs Life are limited by the Code. In
the event the Committee determines that such limits are exceeded, it shall cause
any such excess contributions to be distributed, forfeited or placed in the
non-qualified Supplemental Plan in accordance with the terms of the Savings &
Retirement Plan and the Supplemental Plan. A distribution from the vested
portion of an employee's account is generally payable upon retirement at or
after normal retirement age (age 65) or upon other termination of employment.
AmerUs Life may terminate or amend the Savings & Retirement Plan, the
Supplemental Plan, or completely discontinue contributions, at any time it may
deem advisable.

SUPPLEMENTAL PLAN

AmerUs Life has adopted, effective January 1, 1996, the Supplemental Plan.
Certain employees whose benefits under the Savings & Retirement Plan are limited
by the provisions of Section 401(a)(17) of the Code and for whom compensation is
deferred, are eligible to participate in such plan. The Supplemental Plan is not
intended to meet the qualification requirements of Section 401 of the Code, and
no cash or funds shall be set aside or otherwise segregated for the payment of
benefits under such plan until such time as benefits are actually paid.

FROZEN PENSION PLANS

Prior to January 1, 1996, American Mutual Life maintained the Frozen Pension
Plans, which were qualified under Section 401(a) of the Code. The benefits under
both such plans were curtailed as of December 31, 1995 and the Frozen Pension
Plans were merged into the surviving American Mutual Life Insurance Company
Pension Plan (the "Surviving AML Pension Plan"). Retirement benefits under the
predecessor AML Employees' Frozen Pension Plan were based primarily on an
employee's years of service and compensation during the highest five consecutive
plan years of employment or the last 60 months, if greater, as of December 31,
1995; retirement benefits under the predecessor AML (formerly Central Life)
Frozen Pension Plan were based primarily on an employee's years of service and
career compensation as of December 31, 1995. All employees' frozen accrued
benefits as of December 31, 1995 are fully vested.

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<PAGE>

Prior to January 1, 1996, American Mutual Life also maintained the AML
Frozen SERP and the Central Life Frozen SERP, which were similar in operation to
the Supplemental Plan currently in effect. The benefits under these plans were
also curtailed as of December 31, 1995.

The following table sets forth the frozen accrued monthly benefits payable
as a straight life annuity to each of the Named Executive Officers under the
Surviving AML Pension Plan, including the AML Frozen SERP, assuming retirement
at age 65 (current normal retirement age):

<TABLE>
<CAPTION>
PENSION TABLE
FROZEN ACCRUED BENEFITS UNDER THE
SURVIVING AML PENSION PLAN INCLUDING THE FROZEN SERP
- ----------------------------------------------------------------------------------------------
NAME MONTHLY BENEFITS
- --------------------------------------------------------------------------- -----------------
<S> <C>
Roger K. Brooks............................................................ $ 27,550
D T Doan................................................................... 15,640
Thomas C. Godlasky......................................................... 321
Michael E. Sproule......................................................... 1,360
Sam C. Kalainov............................................................ 34,261(1)
</TABLE>

- --------------
(1) Included in this amount is $9,148 in monthly benefits due under the terms of
an Employment Agreement, dated February 1, 1995, between American Mutual
Life and Sam C. Kalainov. See
"--Employment Agreement."

EMPLOYMENT AGREEMENT

AmerUs Life entered into an employment agreement (the "Employment
Agreement") with Mr. Kalainov, dated February 1, 1995, under which he serves as
the Chairman of the Board of Directors of AmerUs Life and Chairman of AmerUs
Life's Charitable Foundation (the "Foundation"). The term of the Employment
Agreement continues until May 15, 2000, but may expire earlier if Mr. Brooks
ceases to perform the duties of Chief Executive Officer ("CEO") of AmerUs Life.
If Mr. Kalainov's service as Chairman terminates prior to May 15, 2000, AmerUs
Life is required to execute a consulting contract with him pursuant to which,
among other things, AmerUs Life is obligated to pay the difference between the
benefits Mr. Kalainov receives under AmerUs Life's pension plans and the sum of
his base salary plus incentive compensation for the preceding 12 months. The
Employment Agreement provides that Mr. Kalainov will serve as Chairman of the
Foundation until May 15, 2000.

Pursuant to the Employment Agreement, Mr. Kalainov receives the annual
salary and incentive compensation described in the Summary Compensation Table.
Mr. Kalainov participates in AmerUs Life's employee benefit plan (the "Benefit
Plan") and is also entitled to certain perquisites and other incidental
expenses. Mr. Kalainov is also entitled to certain retirement benefits and
health insurance coverage upon his retirement. Prior to the consummation of the
Offerings, Mr. Kalainov's employment agreement was assigned by the Company to
AmerUs Group, which assumed all obligations thereunder.

LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS

The Company's Articles of Incorporation provide that the Company shall
indemnify its directors to the fullest extent possible under the IBCA. The
Company's Bylaws extend the same indemnity to its officers. The Articles of
Incorporation provide that no director shall be liable to the Company or its
shareholders for monetary damages for breach of the individual's fiduciary duty
as a director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its shareholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for any transaction in which the director derived an improper
personal benefit, or (iv) under the IBCA provisions relating to improper
distributions. The Company has also entered into indemnification agreements with
its directors and executive officers with respect to liabilities arising out of
certain matters, including matters arising under the Securities Act.

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<PAGE>
CERTAIN TRANSACTIONS AND RELATIONSHIPS

THE FOLLOWING SUMMARIES OF THE INTERCOMPANY AGREEMENT AND OTHER AGREEMENTS
IDENTIFIED DO NOT PURPORT TO BE COMPLETE AND ARE QUALIFIED IN THEIR ENTIRETY BY
REFERENCE TO SUCH AGREEMENTS. A COPY OF THE INTERCOMPANY AGREEMENT AND THE OTHER
AGREEMENTS IDENTIFIED BELOW HAVE BEEN FILED AS EXHIBITS TO THE REGISTRATION
STATEMENT OF WHICH THIS PROSPECTUS IS A PART. AS USED HEREIN, "AMERUS AFFILIATED
GROUP" MEANS AMHC AND ITS DIRECT AND INDIRECT SUBSIDIARIES NOW OR HEREAFTER
EXISTING, OTHER THAN THE COMPANY AND ITS SUBSIDIARIES. CAPITALIZED TERMS USED
BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN TO THEM IN SUCH AGREEMENTS.

AmerUs Life is a wholly-owned direct subsidiary of the Company. The Company
is a direct subsidiary of AmerUs Group, which in turn is a wholly-owned direct
subsidiary of AMHC. As a result of such ownership, AMHC, AmerUs Group, the other
subsidiaries of AmerUs Group and the Company and its subsidiaries, including
AmerUs Life, have a variety of relationships, certain of which are summarized
below. Management believes that the terms of the agreements described herein are
on a basis no less favorable than could be obtained from unaffiliated third
parties.

OWNERSHIP OF VOTING INTERESTS OF THE COMPANY

As a result of the Reorganization of the Company and its affiliates into a
mutual insurance holding company structure, AMHC is required by Iowa law to own,
directly or indirectly through one or more intermediate holding companies,
shares of capital stock of the Company which carry the right to cast a majority
of the votes entitled to be cast by all of the outstanding shares of the capital
stock at a shareholders' meeting of the Company. See "Supervision and
Regulation--Regulation of the Company and AMHC." In compliance with this
requirement, all of the issued and outstanding shares of the Company's Class B
Common Stock are owned by AmerUs Group, a wholly-owned subsidiary of AMHC and
the Company's immediate parent. Such ownership will continue after the closing
of this Offering. Additionally, the Company's Articles of Incorporation provide
that no shares of its Class B Common Stock may be owned by any person other than
AMHC, a subsidiary of AMHC or another mutual insurance holding company or
intermediate holding company as expressly authorized by Iowa law or by the Iowa
Commissioner. See "Ownership of Common Stock--Ownership of Class B Common
Stock." Any proposed amendments to such provisions of the Company's Articles of
Incorporation are subject to approval by the Iowa Commissioner and the Iowa
Attorney General.

AMHC'S POLICY WITH RESPECT TO CORPORATE OPPORTUNITIES

The Company has been advised that AMHC has adopted a general policy with
respect to certain corporate opportunities presented to AMHC. The implementation
of such policy in any situation is expressly subject to any applicable
regulatory, tax, contractual or legal restrictions as well as issues as to
feasibility. Pursuant to such policy, so long as AMHC directly or indirectly
owns at least 50.1% of the voting power of the outstanding common stock of the
Company (the "Voting Control Period"), AMHC intends to first offer to the
Company any corporate opportunity relating to the acquisition of any stock life
insurance company or any company (other than a mutual insurance holding company)
primarily engaged in owning a stock life insurance company. During the Voting
Control Period, AMHC also intends to first offer to the Company any corporate
opportunity primarily relating to a joint venture, partnership, or similar
affiliation in the life insurance or annuity industry. During the Voting Control
Period, in the event that AMHC merges with a mutual insurance holding company
owning a stock life insurance company or a mutual insurance company is
reorganized pursuant to Chapter 521A of the Iowa Code into a stock life
insurance company subsidiary of AMHC, AMHC intends, if the other party to the
transaction agrees, to offer the Company the corporate opportunity to combine
such acquired company with the Company or a subsidiary thereof in exchange for
appropriate consideration.

Any combination would be on terms which are approved by a majority of the
independent directors of AMHC and the Company and set forth in a written
agreement between the parties. However, neither AMHC nor the Company is
obligated to take any action which is not consistent with their respective
fiduciary duties or applicable contractual, regulatory, tax or legal
requirements. Moreover, the results of negotiations with parties interested in a
potential transaction or other factors, such as feasibility or a

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desire to maintain the separate identities and assets of two insurers, may
result in AMHC not presenting a potential transaction to the Company or a
company acquired by AMHC not being combined with the Company or a subsidiary
thereof.

Under AMHC's policy, a corporate opportunity is considered to be a business
opportunity in the life insurance and annuity business known to AMHC which the
Company is legally and financially able to undertake, is of practical advantage
to the Company and is one in which the Company has an interest or a reasonable
expectancy. If the Company does not choose to pursue a corporate opportunity
within a reasonable period after such opportunity is first presented to it, AMHC
would not intend to afford the Company any further opportunity with respect to
such potential transaction.

INTERCOMPANY AGREEMENT

AMHC, AmerUs Group and the Company have entered into an Intercompany
Agreement dated as of September 15, 1996 (the "Intercompany Agreement"), certain
provisions of which are summarized below.

LICENSE TO USE THE AMERUS NAME AND CERTAIN TRADEMARKS

Pursuant to the Intercompany Agreement, AmerUs Group and certain members of
the AmerUs Affiliated Group have granted to the Company and certain of its
subsidiaries, a non-exclusive, revocable license to use the AmerUs name and
certain trademarks (collectively, the "Trademarks") solely in connection with
the Company's life insurance business and activities related to such life
insurance business. The Intercompany Agreement provides, among other things,
that subject to AmerUs Group's ability to revoke the license in the
circumstances described below and subject to regulatory approval, within a
specified time from the date on which the AmerUs Affiliated Group ceases to
control more than 50% of the combined voting power of the outstanding Common
Stock (the "License Trigger Date"), if the Company's name or any of its
subsidiaries' names at such time includes the "AmerUs" name, the Company and
such subsidiaries will be required to change their names and will be required to
discontinue the use of certain related marks. Following the License Trigger
Date, the Company and its subsidiaries will continue to have the right to use
the AmerUs name in connection with the identification of insurance products for
an initial five-year period with an option to renew for an additional five
years, for which the Company will pay a nominal annual fee to AmerUs Group until
such time as the Company and its subsidiaries completely discontinue use of the
"AmerUs" name. In addition, the Intercompany Agreement provides that the Company
and its subsidiaries will not, without the prior written consent of AmerUs
Group, take any action with respect to (i) any litigation or proceeding
involving the Trademarks, (ii) any change in the Company names, logos and other
identifications that might reasonably be expected to affect the Trademarks or
(iii) any advertising campaigns or strategies that use the Trademarks or that
refer to any member of the AmerUs Affiliated Group. AmerUs Group has the right
to revoke the license under certain circumstances relating to advertising,
promotion or use of the Trademarks in a manner contrary to AmerUs Group
guidelines. In addition, AmerUs Group can revoke any of the Company's
subsidiaries' use of the license if there is a change of control of any such
subsidiary of the Company that is licensed to use the Trademarks. A revocation
by AmerUs Group of the license to use the Trademarks could have a material
adverse effect on the Company's ability to conduct its business.

INDEMNIFICATION

The Intercompany Agreement provides that the Company will indemnify each
member of the AmerUs Affiliated Group and each of their respective officers,
directors, employees and agents (collectively, the "Indemnitees") against losses
based on, arising out of or resulting from (i) the use of the Trademarks by the
Company or its subsidiaries, (ii) the ownership or the operation of the assets
or properties, and the operation or conduct of the business, of the Company or
its subsidiaries, (iii) any other activities of the Company or its subsidiaries,
(iv) any other acts or omissions by the Company or its subsidiaries arising out
of performance of the Intercompany Agreement and certain other agreements, (v)
any guaranty, keep well, net worth or financial condition maintenance agreement
of or by any member of the AmerUs Affiliated Group provided to any parties with
respect to any actual or contingent obligation of the Company or its
subsidiaries, (vi) any breach by the Company of the Intercompany

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Agreement, and (vii) certain other matters. In addition, the Company has agreed
to indemnify the Indemnitees against certain civil liabilities, including
liabilities under the Securities Act, relating to misstatements in or omissions
from the Registration Statement of which this Prospectus forms a part and any
other registration statement that the Company files under the Securities Act
(other than misstatements or omissions made in reliance on information relating
to and furnished by any member of the AmerUs Affiliated Group for use in the
preparation thereof, against which AMHC has agreed to indemnify the Company).
AMHC has also agreed to indemnify the Company and its subsidiaries and each of
their respective officers, directors, employees and agents against losses based
on, arising out of or resulting from (i) any breach by the AmerUs Affiliated
Group of the Intercompany Agreement, (ii) the ownership or the operation of the
assets or properties, and the operation or conduct of the business of any member
of the AmerUs Affiliated Group, (iii) certain third party claims relating to the
Trademarks and (iv) certain other specifically identified matters.

AMHC CONSENT TO CERTAIN EVENTS

The Intercompany Agreement provides that until the date on which the members
of the AmerUs Affiliated Group cease to control at least 50.1% of the combined
voting power of the outstanding Common Stock of the Company (the "Trigger
Date"), the prior written consent of AMHC will be required for: (i) any
consolidation or merger of the Company or any of its subsidiaries with any
person (other than certain transactions involving wholly owned subsidiaries);
(ii) any sale, lease, exchange or other disposition or any acquisition by the
Company or any of its subsidiaries (other than transactions to which the Company
and its wholly owned subsidiaries are the only parties), or any series of
related dispositions or acquisitions, involving consideration in excess of $20
million; (iii) any change in the authorized capital stock of the Company or the
creation of any class or series of capital stock of the Company, (iv) any
issuance by the Company or any subsidiary of the Company of any equity
securities or equity derivative securities, except (a) up to three million
shares of Common Stock pursuant to employee and director stock option, profit
sharing and other benefit plans of the Company and its subsidiaries, (b) the
issuance of Preferred Stock which is not convertible or exchangeable into Common
Stock and which only has voting rights required by law, (c) the issuance of
shares of capital stock of a wholly owned subsidiary of the Company and (d)
pursuant to the Transactions (defined as the Offerings and any corporate
reorganization or transaction undertaken in connection with the Offerings to
which the Company or any of its subsidiaries is a party); (v) the dissolution of
the Company; (vi) transactions or a series of related transactions with
affiliates of the Company (other than members of the AmerUs Affiliated Group)
involving consideration in excess of $10 million, other than (a) the
Transactions, (b) transactions on terms substantially the same as or more
favorable to the Company than those that would be available from an unaffiliated
third party and (c) transactions between or among any of the Company and its
wholly owned subsidiaries; and (vii) any corporate action by the Company which
would cause the Company or AmerUs Life to violate the requirements of Section
521A.14 of the Iowa Insurance Code (relating to mutual insurance holding
companies).

REGISTRATION RIGHTS

The Company has granted to the AmerUs Affiliated Group certain demand and
"piggyback" registration rights with respect to shares of Common Stock owned by
it. The AmerUs Affiliated Group has the right to request up to two demand
registrations in each calendar year. The AmerUs Affiliated Group also has the
right, which it may exercise at any time and from time to time, to include the
shares of Common Stock held by it in certain other registrations of common
equity securities of the Company initiated by the Company on its own behalf or
on behalf of any shareholder of the Company. Such registration rights are
transferable by the AmerUs Affiliated Group provided that such transferee is (i)
a member of the AmerUs Affiliated Group or (ii) an institutional accredited
investor (as defined under Rule 501(a) promulgated under the Securities Act)
permitted to acquire such registrable shares under applicable law. The Company
has agreed to pay all costs and expenses in connection with each such
registration, except underwriting discounts, commissions and legal fees of the
AmerUs Affiliated Group applicable to the shares of Common Stock sold by the
AmerUs Affiliated Group. The Intercompany

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Agreement contains customary terms and provisions with respect to, among other
things, registration procedures and certain rights to indemnification granted by
parties thereunder in connection with the registration of Common Stock on behalf
of the AmerUs Affiliated Group.

REIMBURSEMENT AGREEMENTS

The Company has agreed to pay all costs and expenses incurred in connection
with the Company's formation, the Transactions and all related transactions,
except as otherwise described in this Prospectus.

EQUITY PURCHASE RIGHTS

The Company has agreed that, to the extent permitted by Nasdaq National
Market, Inc. so long as the Company is listed on the Nasdaq National Market, and
so long as the AmerUs Affiliated Group controls at least 50.1% of the combined
voting power of the outstanding Common Stock of the Company, the AmerUs
Affiliated Group may purchase its pro rata share (based on its then current
percentage equity interest in the Company) of any voting equity security issued
by the Company (excluding any such securities offered in connection with
employee and director stock option or other benefit plans, dividend reinvestment
plans and other offerings other than for cash).

CERTAIN BUSINESS RELATIONSHIPS

The Company has agreed that all distribution arrangements in effect as of
September 15, 1996 pursuant to which members of the AmerUs Affiliated Group
distribute insurance products of the Company or its subsidiaries shall continue
until such time as the members of the AmerUs Affiliated Group cease to control
at least 50.1% of the combined voting power of the outstanding Common Stock.

MANAGEMENT SERVICES

Until the Trigger Date, the Company has agreed to provide to the AmerUs
Affiliated Group certain management and administrative services, including: (i)
general management services and (ii) assistance in matters relating to
operations, strategy and business planning. In connection with such services the
Company will be subject to the exclusive authority of the Board of Directors of
AMHC or the AmerUs Affiliated Group member for which such services are
performed. AmerUs Group will pay the Company $2.0 million per year in
consideration for such services, commencing after the Distribution.

TAX ALLOCATION AGREEMENT

The Company and AMHC have entered into an agreement relating to the
allocation of Federal and state income tax liabilities attributable to periods
before and after the Offerings (the "Tax Allocation Agreement"). Under the Tax
Allocation Agreement, the Company will be responsible for all income tax
liabilities that are attributable to the net income of the Company and its
subsidiaries under applicable Federal and state tax laws. The Company will have
no responsibility for income tax liabilities attributable to AMHC and its
wholly-owned subsidiaries under such laws, including any liabilities that may
have arisen while such subsidiaries were wholly-owned subsidiaries of AmerUs
Life. If and to the extent that losses of AMHC and its wholly-owned subsidiaries
are applied to reduce the Federal or state income taxes attributable to the net
income of the Company, the Company will be required to make a payment to AMHC
equal to such tax reduction. Conversely, if and to the extent that losses of the
Company are applied to reduce the Federal or state income tax liability
attributable to the net income of AMHC and its wholly-owned subsidiaries for any
year, AMHC will be required to make a payment to the Company equal to such tax
reduction. It is not anticipated that the Federal or state income tax liability
of the Company or its subsidiaries will be determined on a consolidated or
combined basis with that of AMHC or any of its wholly-owned subsidiaries for any
period after the Offerings.

AGREEMENTS INVOLVING REAL ESTATE

AmerUs Life has entered into asset and property management contracts with
API. Pursuant to such agreements, API provides asset and property management
services to AmerUs Life with respect to certain real estate owned by AmerUs
Life. The total expenses incurred by AmerUs Life pursuant to such agreements
equaled approximately $1,422,000 and $839,000 for the year ended December 31,
1995 and the nine months ended September 30, 1996, respectively.

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AmerUs Life, as lessor, has entered into leases of business property with
various members of the AmerUs Affiliated Group. These leases have varying terms
which call for combined monthly rentals of $36,000. These leases will be
assigned to API at the time the Capital Contribution is made, as the properties
to which they relate are to be included in the properties which will be
distributed as part of the Capital Contribution.

Total rental income earned by the Company under all agreements with members
of the AmerUs Affiliated Group was approximately $32,000 and $349,000 for the
year ended December 31, 1995 and the nine months ended September 30, 1996,
respectively.

The Company will enter into lease agreements with API at the time of the
Capital Contribution because the facilities occupied by the Company as its
executive and home offices will be transferred to API as part of the Capital
Contribution. The lease agreements will require monthly payments of $143,000 on
a net basis for a period of 5 years. API has acquired real estate which is
intended to be the combined executive and home office locations of the Company.
It is the Company's intention to relocate to such facilities in the near future
and enter into lease agreements with API with respect to such facilities which
will replace the Company's then-existing leases with API.

During 1995, AmerUs Life paid rentals to AmerUs Bank of $48,000 and $24,000
for the year ended December 31, 1995 and the nine months ended September 30,
1996, respectively, under the terms of a lease agreement which expired in 1996.

AmerUs Life has entered into various limited partnership and joint venture
agreements in which API or an affiliate serves as general partner. AmerUs Life
contributed portions of its joint venture interests to API and sold several of
these partnership interests to newly formed partnerships in which API has an
interest. Total proceeds from these sales were $10,956,600 and $1,638,000 in the
year ended December 31, 1995 and in the nine months ended September 30, 1996,
respectively. After such sales, AmerUs Life purchased a 9.75% limited
partnership interest in one of the newly formed partnerships for $2,160,000, of
which $1,026,000 had been contributed as of September 30, 1996. In addition,
AmerUs Life agreed to make loans to the newly formed partnerships in the
aggregate amount of up to $20,000,000, of which $19,600,000 was outstanding as
of September 30, 1996.

AmerUs Life has also entered into agreements with various partnerships in
which API has an interest pursuant to which AmerUs Life is obligated to make
future capital contribution to such partnerships in an amount not to exceed
$5,830,000.

As of September 30, 1996, AmerUs Life had a total investment of $16,420,000
in various partnerships and joint ventures in which API had an interest.

AmerUs Life sold certain limited partnership interests to API at their
carrying value of $1,697,000 in 1995.

LOAN SERVICING AGREEMENTS

AmerUs Life has entered into various loan servicing agreements with various
members of the AmerUs Affiliated Group. The total expenses incurred by AmerUs
Life for such services was approximately $1,533,000 and $1,189,000 for the year
ended December 31, 1995 and the nine months ended September 30, 1996,
respectively.

AmerUs Life has also entered into various loan servicing agreements with
AmerUs Bank. Pursuant to such agreements, AmerUs Life services certain
nonresidential mortgage loans on behalf of AmerUs Bank. The total revenues
earned by AmerUs Life for such services were approximately $30,000 and $21,000
for the year ended December 31, 1995 and the nine months ended September 30,
1996, respectively.

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OTHER SERVICE AGREEMENTS

AmerUs Life has entered into various miscellaneous services agreements with
members of the AmerUs Affiliated Group. Pursuant to such agreements, AmerUs Life
provides certain communications, tax, law department, accounting department,
internal audit, administrative and data processing services to such other
parties to the agreements, as requested. The aggregate revenues earned for
services performed by AmerUs Life in accordance with such agreements were
approximately $6,604,000 and $4,385,000 for the year ended December 31, 1995 and
the nine months ended September 30, 1996, respectively.

PURCHASE OF LOANS AND SECURITIZATION

AmerUs Life has entered into a purchase agreement with AmerUs Bank, dated as
of June 28, 1996, pursuant to which AmerUs Life acquired an HEL Asset-Backed
Class A Note (the "Note") and Class R Certificate Series 1996-1 (the
"Certificate"). The Note had a face amount of $43,715,845 and pays interest at
the rate of 8.35% per annum. The Certificate has a face amount of $3,039,069 and
pays interest at the rate of 16.81% per annum. The Note and Certificate are
backed by the assets of the AB Home Equity Loan Trust (the "AB Trust"), which
consist of approximately $47 million of second mortgage loans. Pursuant to a
Pooling and Servicing Agreement, dated as of June 28, 1996 (the "Pooling and
Servicing Agreement"), between AmerUs Bank and Boatmen's Trust Company
("Boatmen's"), and a Transfer Agreement, dated as of June 28, 1996, between
AmerUs Bank and Boatmen's, as trustee of the AB Trust, the AB Trust acquired
such loans from AmerUs Bank, and paid a purchase price of $46,754,914, the par
value of the loans. Under the Pooling and Servicing Agreement AmerUs Bank acts
as the servicer of the loans and receives a servicing fee equivalent to the
amount of all interest collected on the loans in excess of 8.9%.

SALE OF INSURANCE POLICIES

AmerUs Life has entered into an agreement, dated January 1, 1995, with
AmerUs Investments, Inc. ("AmerUs Investments"), a wholly-owned subsidiary of
AmerUs Bank, to market products of AmerUs Life. Pursuant to this agreement,
AmerUs Life pays AmerUs Bank fees in the form of commissions in exchange for
generating sales of such products. Total commissions paid to AmerUs Investments
were $1,259,000 and $321,000 for the year ended December 31, 1995 and nine
months ended September 30, 1996, respectively.

The Company has also entered into certain Affiliated Agent Contracts with
employees of AmerUs Investments (the "Affiliated Agents") to solicit, sell and
service AmerUs Life insurance products and has also entered into a Servicing
Agreement, dated March 1, 1992, with AmerUs Investments pursuant to which AmerUs
Investments agreed to service the business sold by any Affiliated Agent and
otherwise supervise its employees who are Affiliated Agents.

CAPITAL CONTRIBUTION

Prior to the Distribution, AmerUs Life will make the Capital Contribution to
its Non-Life Insurance Subsidiaries. It is anticipated that the Capital
Contribution will consist of cash, commercial mortgages, real estate and fixed
maturity securities having a net carrying value of approximately $79 million.
Following the Capital Contribution and prior to the Offerings, AmerUs Life will
cause its Non-Life Insurance Subsidiaries to be distributed to AmerUs Group
pursuant to the Distribution. The Distribution will effectively separate AMHC's
non-life insurance businesses from the life insurance businesses owned by the
Company, such that the companies engaged in non-life insurance businesses will
no longer be subsidiaries of the Company. See "The Reorganization and
Distribution of the Non-Life Insurance Subsidiaries."

From time to time AmerUs Life has made capital contributions to Lartnec
Investment Co. ("Lartnec"). Lartnec had previously been a subsidiary of AmerUs
Life and AFS had been a subsidiary of Lartnec. Prior to the Distribution, AFS
was merged into Lartnec and Lartnec was then merged upstream into AmerUs Life,
and pursuant to the Distribution the Non-Life Insurance Subsidiaries were
distributed to AmerUs Group, thereby becoming sister corporations to the
Company. In 1995, AmerUs Life made

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capital contributions to Lartnec in the approximate aggregate amount of
$41,156,000. In 1996, prior to the Distribution, AmerUs Life made additional
capital contributions to Lartnec in the approximate total amount of $4,563,000.

LOANS AND CREDIT SUPPORT TO THE AMERUS AFFILIATED GROUP

AmerUs Life has provided financing to members of the AmerUs Affiliated Group
or their affiliates for various purposes. The outstanding balance of all such
financings was $63.9 million and $75.3 million as of December 31, 1995 and
September 30, 1996, respectively. AmerUs Life recorded interest income of $6.0
million and $4.7 million for the year ended December 31, 1995 and the nine
months ended September 30, 1996, respectively. After giving effect to the
Capital Contribution, the amounts for such periods would have been $48.9 million
and $70.1 million, respectively.

AmerUs Life has also pledged investment securities as collateral for
indebtedness of the AmerUs Affiliated Group. AmerUs Life will be released from
this collateral agreement under the terms of the new Bank Credit Facility. The
value of the collateral pledged was $112.4 million and $141.7 million as of
December 31, 1995 and September 30, 1996, respectively. The pledges will be
released upon the effectiveness of the Bank Credit Facility.

In addition, AmerUs Life guaranteed various borrowings of members of the
AmerUs Affiliated Group with outstanding balances of approximately $7.3 million
and $7.2 million at December 31, 1995 and September 30, 1996, respectively.

AmerUs Life has outstanding loan commitments to various partnerships in
which API has an interest. At September 30, 1996, the outstanding loan
commitments were approximately $16,000,000.

OWNERSHIP OF COMMON STOCK

OWNERSHIP OF CLASS A COMMON STOCK

Immediately prior to the Offerings there will be 14.5 million issued and
outstanding shares of Class A Common Stock, all of which will be beneficially
owned by AmerUs Group. Other than such shares, as of the date of this Prospectus
no shares of Class A Common Stock were beneficially owned by any person,
including any director or officer of the Company or AmerUs Life.

OWNERSHIP OF CLASS B COMMON STOCK

Immediately prior to the Offerings, there will be five million issued and
outstanding shares of Class B Common Stock, all of which will be owned by AmerUs
Group. Pursuant to the Company's Articles of Incorporation, no shares of Class B
Common Stock may be owned by any person other than AMHC, a subsidiary of AMHC or
another mutual insurance holding company or intermediate holding company as
authorized by applicable law.

CLASS A COMMON STOCK SUBSCRIPTIONS BY MANAGEMENT

Directors and officers of the Company may subscribe for Shares in the
Subscription Offering if they are Subscription Policyowners. The terms pursuant
to which directors and officers of the Company may obtain Shares in the
Subscription Offering are identical to the terms for other Subscription
Policyowners. In addition, directors and officers as a group would be limited
under rules recently proposed by the Iowa Commissioner to purchasing no more
than five percent of the shares offered in any offering of Common Stock made by
the Company.

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DESCRIPTION OF THE CAPITAL STOCK

The following description does not purport to be complete and is qualified
in its entirety by reference to the Company's Articles of Incorporation, a copy
of which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part.

GENERAL

The Company is authorized to issue 75 million shares of Class A Common
Stock, no par value, and 50 million shares of Class B Common Stock, no par
value. As of the date hereof, there were 14.5 million shares of Class A Common
Stock outstanding and five million shares of Class B Common Stock outstanding,
all of which were held by the Selling Shareholder. In addition, 1.4 million and
150,000 shares of Class A Common Stock are reserved for issuance under options
granted or available for grant under the Stock Option Plan and Director Plan,
respectively, subject to the completion of the Offerings, and five million
shares of Class A Common Stock are reserved for issuance upon conversion of
Class B Common Stock. The Company is also authorized to issue shares of
preferred stock on such terms as determined by the Company Board of Directors
(the "Preferred Stock"). See "--Preferred Stock."

The Class B Common Stock (or any interest therein) may only be owned by
AMHC, a subsidiary of AMHC or a mutual insurance holding company or intermediate
holding company which is expressly authorized by applicable law to own or have a
beneficial interest in the Class B Common Stock (a "Permitted Class B Holder").
Under current Iowa law, a Permitted Class B Holder must at all times possess the
right to cast at least a majority of the votes of the outstanding shares of the
capital stock of the Company.

The Articles of Incorporation provide that the number of outstanding shares
of Class A Common Stock (excluding shares of Class A Common Stock owned by AMHC
or another Permitted Class B Holder) shall not at any time exceed the number of
outstanding shares of Class B Common Stock plus the shares of Class A Common
Stock owned by AMHC or another Permitted Class B Holder by a ratio of more than
three to one.

Following the closing of the Offerings, assuming that the underwriters in
the Public Offering do not exercise their over-allotment option, there will be
17 million shares of Class A Common Stock outstanding. At such time, AmerUs
Group will own 12 million shares of the Class A Common Stock (71% of the
outstanding shares of Class A Common Stock) and five million shares of Class B
Common Stock (100% of the outstanding shares of Class B Common Stock). AmerUs
Group's ownership of Class A Common Stock and Class B Common Stock will provide
it with 77% of the voting power of the Common Stock and 77% of the economic
value of the Company (assuming that the underwriters in the Public Offering do
not exercise their over-allotment option).

COMMON STOCK

Each share of Class A Common Stock will entitle its holder to one vote per
share on all matters upon which shareholders are entitled to vote (including
election of directors, mergers, sales of assets, dissolution and amendments to
the Articles of Incorporation). Each share of Class B Common Stock will entitle
its holder to one vote per share on all such matters except that, if on the
record date for determining shares eligible to vote, the number of outstanding
shares of Class A Common Stock (excluding shares of Class A Common Stock owned
by a Permitted Class B Holder) and any outstanding shares of Preferred Stock
having voting rights, if any (excluding shares of Preferred Stock owned by a
Permitted Class B Holder), equals or exceeds the number of outstanding shares of
Class B Common Stock plus the outstanding shares of Class A Common Stock owned
by a Permitted Class B Holder, the voting rights for each share of Class B
Common Stock shall be equal to the number of shares of Class A Common Stock
(excluding shares of Class A Common Stock owned by a Permitted Class B Holder)
and Preferred Stock having voting rights, if any, then outstanding (excluding
shares of Preferred Stock owned by a Permitted Class B Holder) plus one divided
by the number of outstanding shares of Class B Common Stock. Accordingly, even
if the number of outstanding shares of Class A Common Stock

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(excluding shares of Class A Common Stock owned by a Permitted Class B Holder)
exceeds the number of outstanding shares of Class B Stock, the Permitted Class B
Holder will always have a majority of the votes.

Both classes of Common Stock will generally vote together as a single class
on all matters; however, the holders of Class A Common Stock and the holders of
Class B Common Stock will vote separately as a class with respect to certain
matters for which class voting is required under Iowa law, including (i)
approval of proposed amendments to the Company's Articles of Incorporation that,
among other things, would alter the designation, rights, preferences or
limitations of all or part of the shares of their respective class, increase or
decrease the aggregate number of authorized shares of such class, effect an
exchange or reclassification or create a right of exchange of all or part of the
shares of one class into shares of another class, create a new class of shares
or increase the rights, preferences, or number of authorized shares of any
existing class so that it would have rights or preferences with respect to
distribution or to dissolution that are prior, superior, or substantially equal
to, the shares of such class, provided that the Class A Common Stock and Class B
Common Stock are not affected by such amendment in the same or a substantially
similar way; (ii) approval of a proposed plan of merger or consolidation if such
plan contains any provisions which, if contained in a proposed amendment to the
Articles of Incorporation, would entitle such class of shares to vote as a class
(with certain limited exceptions for shareholders of the surviving corporation);
and (iii) approval of a plan of share exchange (to be voted upon by each class
included in the exchange).

There is no provision in the Company's Articles of Incorporation permitting
cumulative voting in the election of directors.

No cash dividends may be declared in any fiscal year on the Class B Common
Stock until and unless a cash dividend has been declared on the Class A Common
Stock. Any cash dividends will be declared and paid equally on both classes of
Common Stock.

The classes of Common Stock will rank equally and have equal rights with
respect to distributions and all other rights, including distributions upon
liquidation of the Company. However, in the case of dividends or other
distributions payable on the Common Stock in shares of such stock, including
distributions pursuant to stock splits or stock dividends, only Class A Common
Stock will be distributed with respect to Class A Common Stock and only Class B
Common Stock will be distributed with respect to Class B Common Stock. In no
event will either class of Common Stock be split, divided or combined unless the
other is split, divided or combined equally.

So long as the number of outstanding shares of Class A Common Stock
(excluding shares of Class A Common Stock owned by a Permitted Class B Holder)
does not exceed the number of outstanding shares of Class B Common Stock plus
the shares of Class A Common Stock owned by AMHC or another Permitted Class B
Holder by a ratio of more than three to one, the Class B Common Stock will be
convertible at all times into Class A Common Stock on a share-for-share basis by
surrender of certificates to the transfer agent for the Company. Such conversion
will be without cost to the shareholder, except for any transfer taxes which may
be payable if certificates for Class A Common Stock are issued in a name other
than the one in which the surrendered certificate is registered. Therefore,
shareholders who subsequently desire to sell some or all of their shares of
Class B Common Stock may convert those shares into an equal number of shares of
Class A Common Stock and sell the shares of Class A Common Stock in the public
market. The Company will be required to reserve shares of Class A Common Stock
sufficient for issuance upon conversion of Class B Common Stock. All shares of
Class B Common Stock surrendered upon conversion will have the status of
authorized but unissued shares of Class B Common Stock.

The Articles of Incorporation provide that a Permitted Class B Holder has
the preemptive right to purchase Common Stock to the extent necessary to
maintain the ratio of Class A Common Stock to Class B Common Stock set forth in
the preceding paragraph. The Intercompany Agreement also affords the AmerUs
Affiliated Group certain equity purchase rights. See "Certain Transactions and
Relationships--Intercompany Agreement."

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In the event that AMHC (or any successor mutual insurance holding company)
is demutualized and is converted into a stock company pursuant to Iowa law, then
immediately upon such conversion each share of the Class B Common Stock shall
automatically be converted into one share of Class A Common Stock. AMHC has no
present plans to demutualize.

A Permitted Class B Holder may pledge, subject to a security interest or
lien, encumber, or otherwise hypothecate shares of Class B Common Stock in
excess of the number of shares of Class B Common Stock which carry the right to
cast at least a majority of the votes of the outstanding shares of capital stock
of the Company having voting rights. However, except for a transfer to a
Permitted Class B Holder, a conversion of Class B Common Stock into Class A
Common Stock and except as described in the preceding sentence, no shares of
Class B Common Stock may be conveyed, pledged or otherwise transferred. Any
conveyance, transfer, assignment, pledge, security interest, lien, encumbrance
or hypothecation or alienation by AMHC or any intermediate holding company, in
or on the majority of the voting shares of AmerUs Life shall be deemed void in
inverse chronological order from the date of such transaction to the extent
necessary to give AMHC unencumbered direct or indirect ownership of a majority
of such voting shares.

PREFERRED STOCK

The Board of Directors of the Company is authorized, subject to any
limitations prescribed by law, from time to time to issue up to an aggregate of
20 million shares of Preferred Stock in one or more series, each of such series
to have such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative, participating, optional or other special
rights, and such qualifications, limitations or restrictions thereof, as shall
be determined by the Board of Directors in a resolution or resolutions providing
for the issue of such Preferred Stock; provided, however, that no Preferred
Stock may have more than one vote per share. Thus, any series may, if so
determined by the Board of Directors, have full voting rights with the Class A
Common Stock or superior or limited voting rights, be convertible into Class A
Common Stock or another security of the Company, and have such other relative
rights, preferences and limitations as the Company's Board of Directors shall
determine; provided, however, that no Preferred Stock may have more than one
vote per share. As a result, any class or series of Preferred Stock could have
rights which would adversely affect the rights of the holders of the Class A
Common Stock. The shares of any class or series of Preferred Stock need not be
identical. The issuance of a new series of Preferred Stock, while providing
desirable flexibility in connection with possible acquisitions or other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire, or discouraging a third party from acquiring, a majority
of the outstanding voting stock of the Company.

PREFERRED SECURITIES OF AMERUS CAPITAL I

AmerUs Capital I, a Delaware business trust and a wholly-owned subsidiary of
the Company, currently intends to issue approximately $75 million of trust
preferred securities (the "Preferred Securities") as part of the Company's
financing plan. The assets of the Trust will be invested in Junior Subordinated
Debt Securities of the Company, which debt securities are currently expected to
have a stated maturity of thirty years. If the Company redeems all or a portion
of the Junior Subordinated Debt Securities, the Trust must redeem a
corresponding amount of the Preferred Securities. The dividend rate on the
Preferred Securities will be determined at the time the Preferred Securities are
publicly sold. See the "Preferred Offering."

INDEMNIFICATION AND LIMITATION OF LIABILITY

The Company's Articles of Incorporation provide that no director of the
Company shall be liable to the Company or its shareholders for monetary damages
for any breach of fiduciary duty as a director, except to the extent otherwise
required by the Iowa Business Corporation Act (the "IBCA"). This provision does
not prevent shareholders from obtaining injunctive or other equitable relief
against directors nor does it shield directors from liability under Federal or
state securities laws. In addition, the Articles of Incorporation provide that
the Company shall, to the maximum extent permitted by law, indemnify any person
who incurs any loss by reason of the fact that he is or was or has agreed to be
a

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director or officer of the Company or while a director or officer of the Company
is or was serving at the request of the Company as a director, officer, partner,
trustee, employee or agent of any corporation, partnership, joint venture, trust
or other enterprise, including service with respect to employee benefit plans,
subject to such person having met the standards of conduct required for such
indemnification under Iowa law.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Class A Common Stock is ChaseMellon
Shareholder Services, L.L.C.

CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION
AND BYLAWS OF THE COMPANY

The following discussion is a summary of certain provisions of the Articles
of Incorporation (the "Articles of Incorporation") and Bylaws of the Company
relating to shareholder voting rights, advance notice requirements and other
provisions which may be deemed to have an "anti-takeover" effect. In addition to
these provisions, regulatory restrictions on dispositions of Common Stock by the
Company's parent corporation as well as the inability of the holders of the
Class A Common Stock to elect a majority of the Company's Board of Directors may
also deter attempts to effect, or prevent the consummation of, a change in
control of the Company. See "Description of the Capital Stock." These and other
provisions affect shareholder rights and should be given careful attention. The
following description of certain of these provisions is necessarily general and
is qualified in its entirety by reference to the Articles of Incorporation and
Bylaws, copies of which are included as exhibits to the Registration Statement
of which this Prospectus is a part.

ISSUANCE OF CLASS A COMMON STOCK, PREFERRED STOCK AND OTHER RIGHTS

The Company believes that its ability to issue, by action of a majority of
the Company's entire Board of Directors, and without shareholder consent, the
authorized but unissued shares of Class A Common Stock, shares of Preferred
Stock and other rights will provide the Company with the flexibility necessary
to meet its future needs without experiencing the time delay of having to seek
shareholder approval. Unissued shares of Class A Common Stock and Preferred
Stock will be issuable from time to time for any corporate purpose, including,
without limitation, stock splits, stock dividends, employee benefit and
compensation plans, acquisition and public or private sales for cash as a means
of raising capital. It is possible that the Company's Board of Directors might
use its authority (subject to the restrictions referred to above) to issue Class
A Common Stock, Preferred Stock or other rights in a way that could deter or
impede the completion of a tender offer or other attempt to gain control of the
Company of which the Company's Board of Directors does not approve. The Company
does not have any predetermined plans or commitments to use its authority to
effect any such issuance, but reserves the right to take any action in the
future which the Company's Board of Directors deems to be in the best interests
of the shareholders and the Company under the circumstances.

It is not possible to state the actual effect of any issuance of Preferred
Stock upon the rights of holders of Class A Common Stock because the Company's
Board of Directors has not determined any issuance price or prices, terms or
rights relating to Preferred Stock. However, such effects might include (i)
restrictions on Class A Common Stock dividends if Preferred Stock dividends have
not been paid; (ii) dilution of the voting power and equity interest of existing
holders of Class A Common Stock to the extent that any Preferred Stock series
has voting rights or would acquire voting rights upon the occurrence of certain
events (such as the failure to pay dividends for a specified period) or that any
Preferred Stock series is convertible into Class A Common Stock; and (iii)
current holders of Class A Common Stock not being entitled to share in the
Company's assets upon liquidation, dissolution or winding-up until satisfaction
of any liquidation preferences granted to any series of Preferred Stock.

BOARD OF DIRECTORS

The Articles of Incorporation provide that the number of Company directors
will be determined pursuant to the Bylaws, but will not be less than seven or
more than 21 directors (subject to the rights of

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the holders of any series of Preferred Stock). The Bylaws provide that the exact
number of directors will be determined from time to time by the affirmative vote
of a majority of the Company's entire Board of Directors. At any meeting of the
Company's Board of Directors, a majority of the Company's entire Board of
Directors will constitute a quorum for the transaction of business, and subject
to certain exceptions, at any meeting at which a quorum is present the
affirmative vote of a majority of the directors present will constitute the act
of the Company's Board of Directors. The Company's Board of Directors will be
divided into three classes, designated Classes I, II and III, which will be as
nearly equal in number as possible. Directors of Class I will hold office for a
term expiring at the annual meeting of shareholders to be held in 1997,
directors of Class II will hold office for a term expiring at the annual meeting
of shareholders to be held in 1998 and directors of Class III will be elected to
hold office for a term expiring at the annual meeting of shareholders to be held
in 1999. At each annual meeting of shareholders following such initial
classification and election, the respective successors of each class shall be
elected for three-year terms, and each director will hold office until such
annual meeting and until his or her successor is elected and qualified, unless
the director dies, resigns, is disqualified or is removed from office. Thus,
approximately two-thirds of the members of the Board of Directors at any time
will have had prior board experience. With such a staggered Board of Directors,
at least two annual meetings will normally be required to effect a change in the
composition of a majority of the Board of Directors.

Under the IBCA and the Company's Articles of Incorporation, and subject to
the rights of the holders of any series of Preferred Stock, a majority of the
Board of Directors though less than a quorum, or the sole remaining director,
may fill vacancies on the Board of Directors or newly created directorships
resulting from any increase in the authorized number of directors. The Articles
of Incorporation provide that the election of directors need not be by written
ballot unless the Bylaws so provide. The Bylaws do not require the use of such a
written ballot. The Bylaws provide that the holders of a majority of shares then
entitled to vote if an election of directors were held may remove any director
or the entire Board of Directors, with or without cause.

LIMITATIONS ON CALLING SPECIAL MEETINGS OF SHAREHOLDERS

Under Iowa law, special meetings of shareholders may be called by the Board
of Directors or by such other persons as may be authorized by the articles of
incorporation or the bylaws. In the case of the Company, the Bylaws provide that
special meetings may be called by the Chairman, the President, the Company's
Board of Directors pursuant to a resolution adopted by not less than a majority
of the total number of directors or at the request of the holders of not less
than 25% of the combined voting power of the then outstanding stock of the
Company entitled to vote generally in the election of directors. The notice for
a special meeting must set forth the purpose or purposes of the meeting and,
except as otherwise required by law or the Articles of Incorporation, no
business will be transacted at any special meeting of shareholders other than
the items of business stated in the notice.

ADVANCE NOTICE REQUIREMENTS

The Bylaws establish advance notice procedures with regard to (i) the
nomination, other than by or at the direction of the Company's Board of
Directors, of candidates for election to the Company's Board of Directors (the
"Nomination Provision") and (ii) certain business to be brought before an annual
meeting of shareholders of the Company (the "Business Provision").

The Nomination Provision, by requiring advance notice of nominations by
shareholders, affords the Company's Board of Directors a meaningful opportunity
to consider the qualifications of the proposed nominees and, to the extent
deemed necessary or desirable by the Company's Board of Directors, to inform
shareholders about such qualifications.

The Business Provision, by requiring advance notice of business proposed to
be brought before an annual meeting, provides a more orderly procedure for
conducting annual meetings of shareholders and provides the Company's Board of
Directors with a meaningful opportunity prior to the meeting to inform
shareholders, to the extent deemed necessary or desirable by the Company's Board
of Directors, of any business proposed to be conducted at such meeting, together
with any recommendation of the Company's Board of Directors. The Business
Provision does not affect the right of shareholders to make

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shareholder proposals for inclusion in proxy statements for the Company's annual
meetings of shareholders pursuant to the rules of the Commission. In addition,
neither the Nomination Provision nor the Business Provision will prevent any
shareholder or shareholders holding at least 25% of the shares entitled to vote
on a particular matter from requesting a special meeting with respect to such
matter as described above in "--Limitations on Calling Special Meetings of
Shareholders."

Although these Bylaw provisions do not give the Company's Board of Directors
any power to approve or disapprove of shareholder nominations for the election
of directors or of any other business desired by shareholders to be conducted at
an annual meeting, they may make it difficult for a third party to conduct a
solicitation of proxies to elect its own slate of directors or otherwise attempt
to obtain control of the Company, even if such a solicitation or attempt might
be beneficial to the Company and its shareholders.

AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS

Except to the extent the Articles of Incorporation or Bylaws otherwise
provide, the Company's Board of Directors may, upon the affirmative vote of a
majority of the entire Board, amend or repeal any Bylaw. The Articles of
Incorporation may be amended with the affirmative vote of the holders of a
majority of the outstanding voting securities of the Company having the right to
vote generally in the election of directors; PROVIDED, that any proposed
amendment to the Articles of Incorporation which would alter the required ratio
of outstanding shares of Class A Common Stock to outstanding shares of Class B
Common Stock would require the approval of a majority of the outstanding shares
of Class A Common Stock (excluding shares owned by the Permitted Class B
Holders). Under Iowa law, certain proposed amendments to the Articles of
Incorporation which adversely affect the rights of a particular class of stock
must be approved by a majority of such class.

STATE STATUTORY PROVISIONS

Any merger or acquisition of the Company by another entity or the
acquisition or attempted acquisition of more than 10% of the stock of the
Company is subject to regulatory approval by the Iowa Commissioner. See
"Supervision and Regulation--Regulation of the Company and AMHC."

Section 490.1108 of the IBCA provides that in considering acquisition
proposals, directors may consider, in addition to the consideration of the
effects of any action on shareholders, the effects on the company's employees,
suppliers, creditors, customers and the communities in which it operates, as
well as the long-term and short-term interests of the company. Consideration of
any or all community interest factors is not a violation of the business
judgment rule, even if the directors reasonably determine that effects on a
community or other factors outweigh the financial or other benefits to the
company or a shareholder or group of shareholders. Section 490.624A of the IBCA
also includes authorization of "poison pills" which include, without limitation,
terms and conditions of stock rights or options issued by a corporation that
preclude or limit the exercise, transfer or receipt of stock rights by persons
owning or offering to acquire a specified number or percentage of a
corporation's outstanding shares. Unlike most states, Iowa does not presently
have a "business combination" law prohibiting business combinations with a
shareholder who holds over a specified percentage of stock for less than a
specified period after crossing the threshold.

The foregoing provisions of state law could have the effect of delaying,
deferring or preventing a change in control of the Company if the Board of
Directors determines that a change of control is not in the best interests of
the Company, its shareholders and other constituencies. In addition, the
regulatory restrictions on the acquisition of securities of the Company may also
deter attempts to effect, or prevent the consummation of, a change in control of
the Company.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offerings, the Company will have 17 million shares of
Class A Common Stock outstanding (assuming that the underwriters in the Public
Offering do not exercise their over-allotment option). All shares sold in the
Offerings will be freely tradeable without restriction or further

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registration under the Securities Act. However, the shares of Class A Common
Stock and Class B Common Stock owned by AmerUs Group will constitute "restricted
securities" within the meaning of Rule 144 promulgated under the Securities Act.
Such shares will not be eligible for sale under Rule 144 until two years after
the date of their issuance. Thereafter, such shares will be subject to the
volume and timing requirements of Rule 144.

All officers and directors of the Company and its affiliates who purchase
shares of Class A Common Stock pursuant to the Subscription Offering would be
required, pursuant to proposed rules of the Iowa Commissioner, to refrain from
offering, selling, contracting to sell or otherwise disposing of such shares for
a period of 180 days following the date of purchase. In addition, AmerUs Group,
the Company and their officers and directors have agreed with the underwriters
not to sell any Common Stock for 180 days from the date of the Public Offering
prospectus without the prior written consent of Goldman, Sachs & Co.

Pursuant to the Intercompany Agreement, the Company has granted AmerUs Group
the right to require the Company to register shares of the Company's common
stock owned by it under the Securities Act. See "Certain Transactions and
Relationships--Intercompany Agreement."

PLAN OF DISTRIBUTION

The Company and the Selling Shareholder are offering up to an aggregate of
five million shares of Class A Common Stock in the Subscription Offering. The
Chicago Corporation, a registered broker-dealer, is acting as Subscription Agent
for the Company and the Selling Shareholder in connection with the solicitation
of subscriptions in the Subscription Offering and with offers and sales of the
Shares. The Company reserves the right to terminate the Subscription Offering at
any time in its sole discretion and to reject any subscription that is
improperly completed, unsigned, or not accompanied by a check or money order for
the purchase price. Subscriptions that are received after the Subscription
Expiration Date will be rejected. See "The Subscription Offering."

The minimum and maximum number of Shares which may be subscribed for are 100
and 5,000 Shares, respectively. Any subscription funds received will be held in
escrow by ChaseMellon Shareholder Services, L.L.C., as Transfer and Escrow Agent
pending the closing of the Subscription Offering. The Subscription Offering is
not contingent on receipt of a minimum number of subscriptions, nor is it
contingent on the consummation of the Public Offering. The period during which
subscriptions will be accepted will end on the Subscription Expiration Date.

The Public Offering Price per share of Class A Common Stock in the Public
Offering will be negotiated among the Company, the Selling Shareholder, Goldman,
Sachs & Co., Donaldson, Lufkin & Jenrette Securities Corporation, Salomon
Brothers Inc and The Chicago Corporation, as representatives of the underwriters
in the Public Offering. Among the factors expected to be considered in
determining the Public Offering Price, in addition to prevailing market
conditions, will be the Company's historical performance, an estimate of the
business potential and the earnings prospects of the Company, an assessment of
the Company's management and the consideration of the above factors in relation
to market valuation of companies in related businesses. The representatives are
also expected to consider, among other factors, the market valuations and
certain financial ratios of selected comparable life insurance companies.

In consideration for the provision of certain advisory services and for
acting as Subscription Agent for the Company and the Selling Shareholder, the
Company and the Selling Shareholder have agreed to pay The Chicago Corporation a
sliding fee equal to between 1.0% and 0.5% of the aggregate proceeds of the
Subscription Offering, subject to a minimum fee of $25,000. The Company and the
Selling Shareholder have also agreed to reimburse The Chicago Corporation for
its reasonable costs and expenses and to indemnify it against certain
liabilities, including liabilities under the Securities Act and the Exchange
Act. John A. Wing, a Director of the Company, is Chairman of The Chicago
Corporation.

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<PAGE>

Goldman, Sachs & Co. and The Chicago Corporation have each from time to time
performed investment banking services for the Company and have received fees in
connection with such services. It is anticipated that Goldman, Sachs & Co. will
be one of the representatives of the underwriters for the Preferred Offering.

LEGAL MATTERS

The validity of the shares of Class A Common Stock offered hereby will be
passed upon for the Company by James A. Smallenberger, Esq., Senior Vice
President and Secretary of the Company, and Sidley & Austin, Chicago, Illinois.
Sidley & Austin will rely as to matters governed by the laws of the State of
Iowa upon the opinion of James A. Smallenberger, Esq.

EXPERTS

The Consolidated Financial Statements and Schedules of the Company as of
December 31, 1995 and 1994 and for each of the years in the three-year period
ended December 31, 1995, have been included herein and in the Registration
Statement in reliance upon the reports of KPMG Peat Marwick LLP, independent
auditors, appearing elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing.

The Company retained Tillinghast, an actuarial consulting firm, to advise it
in connection with actuarial matters involved in the establishment and operation
of the Closed Block. The opinion of Tillinghast, dated October 26, 1995, states
(in reliance upon the matters and subject to the limitations described in such
opinion) that the establishment and operation of the Closed Block as
contemplated by the Plan make adequate provision for allocating to the Closed
Block assets which will be reasonably sufficient to enable the Closed Block to
provide for the guaranteed benefits, certain expenses and taxes associated with
the Closed Block policies, and to provide for the continuation of the current
dividend scales and interest credits in effect prior to the Reorganization if
the experience underlying those scales and credits continues.

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GLOSSARY OF CERTAIN INSURANCE AND
OTHER DEFINED TERMS

THE FOLLOWING GLOSSARY INCLUDES DEFINITIONS OF CERTAIN INSURANCE AND OTHER
DEFINED TERMS.

<TABLE>
<S> <C>
ACQUISITION COSTS............................ Costs including commissions, policy issue and
underwriting costs, and other costs incurred
to acquire or renew traditional life
insurance, universal life insurance and
annuity products.
AFFILIATE.................................... With respect to any person, any other Person
which directly or indirectly controls, is
controlled by or is under common control with
such Person.
A.M. BEST.................................... A.M. Best Company, Inc. A.M. Best financial
condition ratings are opinions of an
insurance company's financial strength,
operating performance and ability to meet its
obligations to policyowners. Such ratings are
based upon a comprehensive review of a
company's financial performance, which is
supplemented by certain data, including
responses to A.M. Best's questionnaires,
quarterly NAIC filings, state insurance
department examination reports, loss reserve
reports, annual reports and reports filed
with state insurance departments. A.M. Best
undertakes a quantitative evaluation based on
profitability, leverage and liquidity and a
qualitative evaluation based upon the
composition of a company's book of business
or spread of risk, the amount,
appropriateness and soundness of reinsurance,
the quality, diversification and estimated
market value of its assets, the adequacy of
its loss reserves and policyowners' surplus
and the experience and competence of its
management. A.M. Best Company, Inc. uses the
following rating scale:
</TABLE>

<TABLE>
<S> <C> <C>
A++ and A+ Superior
A and A- Excellent
B++ and B+ Very Good
B and B- Adequate
C++ and C+ Fair
C and C- Marginal
D Very Vulnerable
E Under State Supervision
F In Liquidation
</TABLE>

<TABLE>
<S> <C>
ANNUALIZED PREMIUM........................... The expected premium payment for a 12-month
period for each policy, excluding single
premium policies. Actual premium payments may
be higher or lower than annualized premiums.
ANNUITY...................................... A contract that pays a periodic income
benefit for the life of a person (the
annuitant), the lives of two or more persons
or a specific period of time.
</TABLE>

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<PAGE>
<TABLE>
<S> <C>
ASSET VALUATION RESERVE OR AVR............... The asset valuation reserve adopted by the
NAIC in December 1991 to replace the MSVR.
AVR appears as a liability on a life
insurer's statutory financial statements
beginning with the insurer's statutory
financial statements for 1992. AVR
establishes STATUTORY RESERVES for debt
securities, preferred stocks, common stock,
mortgage loans, equity real estate and joint
ventures and other invested assets. AVR
generally captures all realized and
unrealized gains and losses on such assets,
other than those resulting from changes in
interest rates. AVR has no effect on
financial statements prepared in conformity
with GAAP.
CAREER GENERAL AGENTS........................ Individuals who are in charge of an insurance
agency. They are independent contractors, who
are responsible for recruiting, training and
developing new agents in addition to
supervising experienced agents in their
agency; however, they may personally sell new
business. Career General Agents are paid
based on the business produced by their
agency and are also paid allowances to cover
their agency expenses and additional amounts
to compensate them for recruiting, training
and developing new agents.
CAREER GENERAL AGENCY SYSTEM................. The network of career general agencies
through which the Company distributes its
insurance and annuity products.
CEDING....................................... The reinsuring of all or a portion of an
insurer's risk with another insurer.
CLOSED BLOCK................................. The closed block of participating business to
be established, as of the Effective Date, by
AmerUs Life for the exclusive benefit of the
policies included therein.
CLOSED BLOCK BUSINESS........................ The policies within the classes specified in
the Plan (which policy classes constitute all
of the classes of individual traditional life
insurance policies and all universal life
insurance policies for which AmerUs Life had
a dividend scale in effect prior to the
Reorganization), but only to the extent such
policies are in force on the Effective Date.
CONVEXITY.................................... A measure of the shape of the price/yield
curve. Convexity explains the difference
between the prices estimated by standard
duration and the actual market prices of a
security resulting from a change in
market-required yield.
COST OF INSURANCE............................ The mortality charges assessed against
universal life insurance policies.
</TABLE>

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<TABLE>
<S> <C>
CREDITING RATES.............................. Interest rates applied to life insurance
policies and annuity contracts, whether
contractually guaranteed or currently
declared for a specified period.
DEFERRED FIXED ANNUITY....................... A fixed annuity that has a deferred or
accumulation period from the time of premium
payment(s) to the payout of a periodic income
benefit.
DIFFERENTIAL EARNINGS AMOUNT................. The amount of additional income which is
imputed to a mutual life insurance company
under Section 809 of the Internal Revenue
Code based on a comparison of the current
one-year average of mutual life insurance
company earnings rates with an adjusted
average of stock life insurance company
earnings rates for the previous three years.
The tax resulting from this additional income
is referred to as the "equity add-on tax."
DIVIDEND SCALE............................... The actuarial formula used by life insurance
companies to determine amounts payable as
dividends on participating policies based on
experience factors relating to, among other
things, investment results, mortality, lapse
rates, expenses and policy loan interest and
utilization rates.
DUFF & PHELPS................................ Duff & Phelps Credit Rating Co. Duff &
Phelp's claims-paying ability ratings are
opinions of an operating insurance company's
future ability to pay its policy and contract
obligations in a timely fashion. Duff &
Phelps claims-paying ability ratings are
based on certain qualitative and quantitative
factors including, among other factors, the
economic fundamentals of the company's
principal lines of business, the company's
competitive position and asset and liability
management practices. Duff & Phelps Credit
Rating Co. uses the following rating scale:
</TABLE>

<TABLE>
<S> <C> <C>
AAA Highest claims-paying
ability
AA+, AA and AA- Very high claims-paying
ability
A+, A and A- High claims-paying
ability
BBB+, BBB Adequate claims-paying
and BBB- ability
BB+, BB and BB- Uncertain claims-paying
ability
B+, B and B- Possessing risk that
policyowners and
contractholders will
not be paid when due
</TABLE>

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<TABLE>
<S> <C> <C>
CCC+, CCC and Substantial risk that
CCC- policyowners and
contractholders will
not be paid when due
DD Company is under order
of liquidation
</TABLE>

<TABLE>
<S> <C>
EQUITY ADD-ON TAX (OR DIFFERENTIAL EARNINGS
TAX)........................................ The tax resulting from the differential
earnings amount, which is the amount of
additional income imputed to a mutual life
insurance company under Section 809 of the
Internal Revenue Code based on a comparison
of the current one-year average of mutual
life insurance company earnings rates with an
adjusted average of stock life insurance
company earnings rates from the previous
three years.
FIRST YEAR ANNUALIZED PREMIUMS............... The expected premium payment for the first
policy year for each policy, excluding single
premium policies. Actual premium payments may
be higher or lower than first year annualized
premiums. This is a common insurance industry
measurement of sales achievement.
FIXED ANNUITY................................ Contract that guarantees that a specific sum
of money will be paid in the future, usually
as monthly income, to an annuitant. The
dollar amount paid to the annuitant will not
fluctuate regardless of adverse changes in
the insurance company's mortality experience,
investment return and expenses.
GAAP......................................... United States generally accepted accounting
principles for life insurance companies.
GENERAL ACCOUNT.............................. All investment accounts maintained by an
insurer, other than the separate accounts.
IMR.......................................... The interest maintenance reserve adopted by
the NAIC in December 1991. IMR appears as a
liability on a life insurer's statutory
financial statements beginning with the
insurer's statutory financial statements for
1992 and applies to all types of fixed income
investments (bonds, preferred stock,
mortgage-backed securities and mortgage
loans). IMR captures the net gains or losses
arising from changes in the overall level of
interest rates which are realized upon the
sale of such investments, and IMR amortizes
these net realized gains into income over the
remaining life of each investment sold. IMR
has no effect on financial statements
prepared in conformity with GAAP.
IN FORCE..................................... A life insurance policy or annuity contract
that has not expired.
</TABLE>

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<TABLE>
<S> <C>
INTEREST-SENSITIVE PRODUCTS.................. Insurance and annuity products for which
interest in excess of guaranteed levels is
credited to the policy.
MEMBER....................................... A person having rights or interests arising
under AMHC's articles of incorporation or
otherwise by law in respect of each insurance
policy or annuity contract of AmerUs Life,
including, but not limited to, any right to
vote.
MOODY'S...................................... Moody's Investors Service, Inc. Moody's
financial strength ratings are opinions of an
operating insurance company's ability to
discharge senior policyowner claims and
obligations pursuant to its insurance
policies. Moody's financial strength ratings
are based on information provided by the
company and federal and state regulators.
Moody's Investors Service, Inc. uses the
following rating scale:
</TABLE>

<TABLE>
<S> <C> <C>
Aaa Exceptional
Aa1, Aa2 and Aa3 Excellent
A1, A2 and A3 Good
Baa1, Baa2 and Adequate
Baa3
Ba1, Ba2 and Ba3 Questionable
B1, B2 and B3 Poor
Caa Very poor
Ca Extremely poor
C Lowest
</TABLE>

<TABLE>
<S> <C>
MORBIDITY.................................... The relative incidence of disability or
sickness due to disease or physical
impairment.
MORTALITY.................................... The relative incidence of death of life
insureds or annuitants.
MSVR......................................... Mandatory securities valuation reserve
required prior to 1992 statutory financial
statements by state insurance regulatory
authorities. MSVR was established as a
liability on a life insurer's statutory
financial statements and was intended to
absorb realized and unrealized gains and
losses sustained from time to time on a
portion of an insurer's general account debt
securities and preferred stock portfolios.
MSVR had no effect on financial statements
prepared in conformity with GAAP. The MSVR
was replaced by the AVR and IMR effective
with respect to an insurer's statutory
financial statements for 1992.
</TABLE>

<TABLE>
<S> <C>
NAIC......................................... The National Association of Insurance
Commissioners, an association of the chief
insurance supervisory officials of each
state, territory and insular possession of
the United States.
</TABLE>

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<PAGE>
<TABLE>
<S> <C>
NET LEVEL METHOD............................. Reserve method used for traditional life
insurance. Such method defines the reserve as
the excess of the present value of future
guaranteed benefits over the present value of
future net premiums.
PARTICIPATING WHOLE LIFE POLICIES OR
PARTICIPATING WHOLE LIFE INSURANCE.......... Whole life policies or insurance under which
the owner thereof is eligible to share in the
earnings of the insurer through dividends.
PERSISTENCY.................................. The percentage of life insurance policies or
annuity contracts remaining in force from
period to period.
PERSONAL PRODUCING GENERAL AGENTS OR PPGAS... Independent agents who sell products directly
to the consumer and write business directly
with insurance companies and who are
compensated primarily for personal
production.
PPGA SYSTEM.................................. The network of PPGAs through which the
Company distributes its insurance and annuity
products.
PLAN......................................... The Plan of Reorganization of American Mutual
Life, including all schedules and exhibits
thereto, pursuant to which American Mutual
Life reorganized into a mutual insurance
holding company structure, as such Plan may
be amended from time to time.
POLICY....................................... Generally, a life insurance policy
(including, without limitation, a pure
endowment contract) or annuity contract
issued by the Company.
PREMIUM...................................... Payments and considerations received on
insurance policies and annuity contracts
issued or reinsured by an insurance company.
Under GAAP, premiums on universal life and
deferred annuity contracts are not accounted
for as revenues.
REINSURANCE.................................. The practice whereby one party, called the
reinsurer or assuming company, in
consideration of a premium paid to such
party, agrees to indemnify another party,
called the ceding company or primary insurer,
for risks underwritten by the ceding company.
Reinsurance provides a primary insurer with
three major benefits: it reduces net
liability on individual risks; it helps to
protect against catastrophic losses; and it
helps to maintain acceptable surplus and
reserve ratios. Reinsurance provides a
primary insurer with additional underwriting
capacity in that the primary insurer can
accept larger risks and can expand the volume
of business it writes without increasing its
capital base. The ceding company remains
liable on its obligations under the policies
reinsured if the reinsurer fails to pay
claims on a reinsured policy.
</TABLE>

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<PAGE>
<TABLE>
<S> <C>
RESERVES..................................... Liabilities established by insurers to
reflect the estimated discounted present
value of costs of claims, payments or
contract liabilities and the related expenses
that the insurer will ultimately be required
to pay in respect of insurance or annuities
it has written.
RISK-BASED CAPITAL REQUIREMENTS OR RBC....... Regulatory and rating agency targeted surplus
based on the relationship of statutory
surplus, with certain adjustments, to the sum
of stated percentages of each element of a
specified list of company risk exposures.
SFAS......................................... Statement of Financial Accounting Standards.
SECOND TO DIE WHOLE LIFE INSURANCE........... A whole life policy in which two persons are
named as insureds. The death benefit is paid
upon the death of the second to die of the
two insureds.
SEPARATE ACCOUNTS............................ Investment accounts maintained by an insurer
to which funds have been allocated for
certain policies under provisions of relevant
state law. The investments in each separate
account are maintained separately from those
in other separate accounts and the general
account. The investment results of the
separate account assets are passed through
directly to the separate account
policyowners, so that an insurer derives
management and other fees from, but bears no
investment risk on, these assets, except the
risk on a small number of products that
returns on separate assets will not meet the
relatively low minimum rate guaranteed on
these products.
SINGLE-PREMIUM LIFE INSURANCE................ A life insurance policy which requires a
single payment of the premium.
SINGLE-PREMIUM VARIABLE ANNUITIES............ A variable annuity contract which requires a
single payment of the premium.
STANDARD & POOR'S............................ Standard & Poor's Ratings Group. Standard &
Poor's claims-paying ability ratings are
opinions of an operating insurance company's
financial ability to meet its obligations
under its insurance policies. Standard &
Poor's claims-paying ability ratings are
based on current information provided by the
subject insurance company and other reliable
sources. Standard & Poor's Rating Group uses
the following rating scale:
</TABLE>

<TABLE>
<S> <C> <C>
AAA Superior
AA+, AA and AA- Excellent financial
security
A+, A and A- Good financial security
BBB+, BBB Adequate
and BBB-
BB+, Bb and BB- Financial security may
be adequate
</TABLE>

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<TABLE>
<S> <C> <C>
B+, B and B- Vulnerable
CCC Extremely vulnerable
R Regulatory actions
BBBq, Bbq and Bq Qualified solvency
ratings
</TABLE>

<TABLE>
<S> <C>
STATUTORY ACCOUNTING PRACTICES............... Accounting practices prescribed or permitted
by the Iowa Department of Insurance.
STATUTORY RESERVES........................... Monetary amounts established by state
insurance law that an insurer must have
available to provide for future obligations
with respect to all policies. Statutory
reserves are liabilities on the balance sheet
of financial statements prepared in
conformity with Statutory Accounting
Practices.
STATUTORY SURPLUS............................ The excess of statutory admitted assets over
statutory liabilities as shown on an
insurer's statutory financial statements.
SURRENDERS AND WITHDRAWALS................... Relinquishment of life insurance policies and
annuity contracts for their entire net cash
surrender values and withdrawals of a portion
of such values.
SUPPLEMENTARY CONTRACT....................... An agreement by an insurer to retain the lump
sum payable under an insurance policy and to
make payments in accordance with the
settlement option chosen.
TERM LIFE INSURANCE.......................... Insurance protection during a certain number
of years but expiring without policy cash
value if the insured survives the stated
period.
TRADITIONAL LIFE INSURANCE................... Consists of whole life insurance and term
life insurance.
UNDERWRITING................................. The insurer's process of examining, accepting
or rejecting insurance risks, and classifying
those accepted, in order to charge the
appropriate premium for each accepted risk.
UNEARNED PREMIUM............................. The portion of an insurance premium paid
other than that which has paid for the
insurance protection already provided on a
policy.
UNIVERSAL LIFE INSURANCE..................... A form of life insurance where 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 insurer. Specific charges are
made against the account for the cost of
insurance protection and for the insurer's
expenses. The universal life form allows
considerable flexibility as to the amount and
timing of premium payments and for the level
of death benefits provided.
VARIABLE ANNUITY............................. Annuity in which premium payments are used to
purchase accumulation units. The value of a
unit
</TABLE>

119
<PAGE>
<TABLE>
<S> <C>
fluctuates in accordance with the investment
experience of a separate account; variable
annuity contracts typically include a general
account guaranteed interest investment
option. At the time of the payment of
benefits to the annuitant, the annuitant can
generally elect from a number of payment
options which provide either fixed or
variable benefit payments.
WHOLE LIFE INSURANCE OR WHOLE LIFE Insurance that may be kept in force for a
POLICIES.................................... person's entire life by paying one or more
premiums. It is paid for in one of three
different ways: (i) ordinary life insurance
(premiums are payable as long as the insured
lives), (ii) limited payment life insurance
(premiums are payable over a specified number
of years), and (iii) single premium life
insurance (a lump sum amount paid at the
inception of the policy). The insurance
policy pays a benefit (contractual amount
adjusted for items such as policy loans and
dividends, if any) at the death of the
insured. Whole life insurance also builds up
cash values.
</TABLE>

120
<PAGE>
AMERUS LIFE HOLDINGS, INC.
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Independent Auditors' Report............................................................................... F-2
Consolidated Balance Sheets as of September 30, 1996 (unaudited) and December 31, 1995 and 1994............ F-3
Consolidated Income Statements for the nine months ended September 30, 1996 and 1995 (unaudited) and the
years ended December 31, 1995, 1994 and 1993.............................................................. F-4
Consolidated Statements of Policyowners' Equity for the nine months ended September 30, 1996 (unaudited)
and the years ended December 31, 1995, 1994 and 1993...................................................... F-5
Consolidated Statements of Cash Flows for the nine months ended September 30, 1996 and 1995 (unaudited) and
the years ended December 31, 1995, 1994 and 1993.......................................................... F-6
Notes to Consolidated Financial Statements................................................................. F-7
</TABLE>

F-1
<PAGE>
WHEN THE TRANSACTION REFERRED TO IN NOTE 1 OF NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS HAS BEEN CONSUMMATED, WE WILL BE ABLE TO RENDER THE
FOLLOWING REPORT.

KPMG PEAT MARWICK LLP

INDEPENDENT AUDITORS' REPORT

The Board of Directors
AmerUs Life Holdings, Inc.:

We have audited the accompanying consolidated balance sheets of AmerUs Life
Holdings, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, policyowners' equity, and cash flows
for each of the years in the three-year period ended December 31, 1995. 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 generally accepted auditing
standards. 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 Life
Holdings, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally accepted
accounting principles.

As discussed in note 1 to the consolidated financial statements, the Company
implemented the provisions of the Statement of Financial Accounting Standards
(SFAS) No. 120, "Accounting and Reporting by Mutual Life Insurance Enterprises
and by Insurance Enterprises for Certain Long-Duration Participating Contracts,"
and in 1993 the Company implemented the provisions of SFAS 106, "Employers
Accounting for Postretirement Benefits Other Than Pensions," and SFAS 115,
"Accounting for Certain Investments in Debt and Equity Securities. Also, as
discussed in note 1 to the consolidated financial statements, the Company has
restated its consolidated financial statements to reflect the spin-off of a
wholly owned subsidiary, which resulted in a change in the subsidiaries
comprising the consolidated financial statements.

Des Moines, Iowa
July 1, 1996, except as to note 1,
which is as of November , 1996

F-2
<PAGE>
AMERUS LIFE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1994
SEPTEMBER 30, SEPTEMBER 30, ---------- ----------
1996 1996
PRO FORMA --------------
AS ADJUSTED
FOR THE (UNAUDITED)
CAPITAL
CONTRIBUTION
(NOTE 15)
--------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Investments (notes 2 and 5):
Securities available-for-sale at fair value:
Fixed maturity securities (amortized cost
1995--$2,951,249 and
1994--$2,663,985)..................................... $2,294,031 $2,297,571 $3,142,096 $2,566,768
Equity securities (cost 1995--$52,869 and
1994--$112,992)....................................... 73,897 74,575 109,675 178,770
Short-term investments................................. 12,002 12,002 39,353 8,529
Mortgage loans on real estate (notes 3 and 5)............ 250,484 260,233 353,597 447,663
Real estate.............................................. 5,875 40,012 52,199 58,164
Policy loans............................................. 63,986 63,986 220,044 209,512
Other investments........................................ 61,831 61,831 48,064 22,256
Closed block investments................................. 1,025,278 1,025,278 -- --
-------------- -------------- ---------- ----------
Total investments.................................... 3,787,384 3,835,488 3,965,028 3,491,662
Cash....................................................... -- -- 4,620 23,382
Accrued investment income.................................. 42,125 42,125 49,226 50,711
Premiums and fees receivable............................... 7,011 7,011 6,908 6,220
Reinsurance receivables.................................... 95 95 1,392 1,169
Deferred policy acquisition costs (note 4)................. 123,546 123,546 267,711 404,361
Deferred income taxes...................................... 4,369 4,369 -- --
Property and equipment (less accumulated depreciation
1995-- $19,229 and 1994--$20,133)......................... 4,600 13,324 13,502 13,979
Other assets............................................... 53,994 53,994 63,559 45,467
Closed block other assets.................................. 211,861 211,861 -- --
-------------- -------------- ---------- ----------
Total assets......................................... $4,234,985 $4,291,813 $4,371,946 $4,036,951
-------------- -------------- ---------- ----------
-------------- -------------- ---------- ----------
LIABILITIES AND POLICYOWNERS' EQUITY
Liabilities:
Policy reserves and policyowner funds:
Future life and annuity policy benefits................ $2,077,923 $2,077,923 $3,435,505 $3,309,529
Policyowner funds...................................... 35,240 35,240 56,474 51,464
-------------- -------------- ---------- ----------
2,113,163 2,113,163 3,491,979 3,360,993
Checks drawn in excess of bank balances.................. 39,283 8,311 -- --
Accrued expenses......................................... 11,802 11,802 11,100 15,677
Dividends payable to policyowners........................ 760 760 129,558 126,041
Policy and contract claims............................... 4,887 4,887 16,617 9,803
Income taxes payable..................................... 35,827 35,827 18,760 15,462
Deferred income taxes (note 6)........................... -- -- 48,623 1,482
Other liabilities........................................ 55,095 55,095 78,939 51,213
Long-term debt (note 5).................................. 36,255 45,055 36,461 37,957
Closed block liabilities................................. 1,501,269 1,501,269 -- --
-------------- -------------- ---------- ----------
Total liabilities.................................... 3,798,341 3,776,169 3,832,037 3,618,628
-------------- -------------- ---------- ----------
Policyowners' equity (note 11):
Unrealized appreciation of available-for-sale securities
(note 2)................................................ 22,718 22,718 108,714 15,320
Policyowners' surplus.................................... 413,926 492,926 431,195 403,003
-------------- -------------- ---------- ----------
Total policyowners' equity........................... 436,644 515,644 539,909 418,323
-------------- -------------- ---------- ----------
Commitments and contingencies (note 10)
Total liabilities and policyowners' equity........... $4,234,985 $4,291,813 $4,371,946 $4,036,951
-------------- -------------- ---------- ----------
-------------- -------------- ---------- ----------
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE>

AMERUS LIFE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1995 1994 1993
NINE MONTHS ENDED SEPTEMBER ------------- ----------- -----------
30,
---------------------------
1996 1995
------------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Insurance premiums......................... $ 133,704 $ 183,864 $ 244,087 $ 237,912 $ 226,360
Universal life and annuity product
charges................................... 39,135 42,561 57,370 56,362 57,473
Net investment income (note 2)............. 189,293 210,491 285,244 275,691 269,854
Realized gains (losses) on investments
(note 2).................................. 62,555 41,564 51,387 (19,930) 15,460
Other...................................... 2,280 2,285 5,390 2,391 2,498
Contribution from the Closed Block......... 2,659 -- -- -- --
------------- ------------ ------------- ----------- -----------
429,626 480,765 643,478 552,426 571,645
------------- ------------ ------------- ----------- -----------
Benefits and expenses:
Policyowner benefits....................... 222,929 279,682 374,620 369,896 364,273
Underwriting, acquisition, and insurance
expenses.................................. 41,892 39,839 58,655 68,604 58,637
Amortization of deferred policy acquisition
costs (note 4)............................ 31,865 41,096 50,239 42,756 47,441
Dividends to policyowners.................. 26,343 36,274 49,414 45,039 45,519
------------- ------------ ------------- ----------- -----------
323,029 396,891 532,928 526,295 515,870
------------- ------------ ------------- ----------- -----------
Income before income taxes and
cumulative effect of change in
accounting principles................. 106,597 83,874 110,550 26,131 55,775
Income tax expense (note 6)................ 40,403 29,866 41,202 19,464 21,352
------------- ------------ ------------- ----------- -----------
Income before cumulative effect of change
in accounting principle................... 66,194 54,008 69,348 6,667 34,423
Cumulative effect of change in accounting
principle, net of tax (note 7)............ -- -- -- -- (3,214)
------------- ------------ ------------- ----------- -----------
Net income............................. $ 66,194 $ 54,008 $ 69,348 $ 6,667 $ 31,209
------------- ------------ ------------- ----------- -----------
------------- ------------ ------------- ----------- -----------
Pro forma net income per common share
(note 15)............................... $ 3.39 $ 3.54
------------- -------------
------------- -------------
Weighted average Common Shares
outstanding 19,500,000 19,500,000
------------- -------------
------------- -------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>

AMERUS LIFE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF POLICYOWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
AND NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
(DEPRECIATION)
OF AVAILABLE-
FOR-SALE TOTAL
SECURITIES POLICYOWNERS' POLICYOWNERS'
(NOTE 2) SURPLUS EQUITY
-------------- -------------- --------------
<S> <C> <C> <C>
Balance at January 1, 1993............................................ $ 50,768 $ 370,399 $ 421,167
Net income............................................................ -- 31,209 31,209
Net unrealized appreciation........................................... 8,058 -- 8,058
Dividend to American Mutual Holding Company (note 11)................. -- (310) (310)
Cumulative effect of change in accounting for investments (note 2).... 45,755 -- 45,755
-------------- -------------- --------------
Balance at December 31, 1993.......................................... 104,581 401,298 505,879
Net income............................................................ -- 6,667 6,667
Net unrealized depreciation........................................... (89,261) -- (89,261)
Dividend to American Mutual Holding Company (note 11)................. -- (4,962) (4,962)
-------------- -------------- --------------
Balance at December 31, 1994.......................................... 15,320 403,003 418,323
Net income............................................................ -- 69,348 69,348
Net unrealized appreciation........................................... 93,394 -- 93,394
Dividend to American Mutual Holding Company (note 11)................. -- (41,156) (41,156)
-------------- -------------- --------------
Balance at December 31, 1995.......................................... 108,714 431,195 539,909
Net income............................................................ -- 66,194 66,194
Net unrealized depreciation........................................... (85,996) -- (85,996)
Dividend to American Mutual Holding Company (note 11)................. -- (4,463) (4,463)
-------------- -------------- --------------
Balance at September 30, 1996 ........................................ $ 22,718 $ 492,926 $ 515,644
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE>
AMERUS LIFE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
NINE MONTHS ENDED --------- --------- ---------
SEPTEMBER 30,
--------------------------
1996 1995
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................................... $ 66,194 $ 54,008 $ 69,348 $ 6,667 $ 31,209
Adjustments to reconcile net income to net cash provided
by operating activities:
Policyowner assessments on universal life and annuity
products.............................................. (43,792) (42,561) (57,370) (56,362) (57,473)
Interest credited to policyowner account balances...... 87,599 92,489 123,360 120,075 122,375
Realized investment (gains) losses..................... (64,705) (41,565) (51,387) 19,930 (15,460)
Change in:
Accrued investment income............................ (1,256) (1,104) 1,485 (1,250) 1,004
Reinsurance ceded receivables........................ 1,297 934 (223) 666 (1,473)
Deferred policy acquisition costs.................... 5,686 (3,564) (7,491) (11,682) (1,259)
Liabilities for future policy benefits............... 49,924 56,321 94,856 94,862 111,619
Policy and contract claims and other policyowner
funds............................................... (6,679) 5,099 6,814 (2,828) 4,390
Income taxes:
Current............................................ 17,067 14,130 3,298 6,727 (14,619)
Deferred........................................... (6,747) (14,856) (3,105) 2,602 (10,034)
Other, net............................................. (21,411) 9,107 22,437 (7,057) 3,366
------------ ------------ --------- --------- ---------
Net cash provided by operating activities.............. 82,977 128,438 202,022 172,350 173,645
------------ ------------ --------- --------- ---------
Cash flows from investing activities:
Purchase of fixed maturities available for sale.......... (1,114,052) (1,212,474) (887,971) (886,236) (817,520)
Maturities, calls, and principal reductions of fixed
maturities available for sale........................... 1,012,272 1,005,946 582,980 591,965 650,108
Purchase of equity securities............................ (102,814) (77,402) (117,345) (69,813) (846,038)
Proceeds from sale of equity securities.................. 122,147 105,853 178,115 48,117 825,223
Proceeds from repayment and sale of mortgage loans....... 71,575 77,973 112,484 234,722 61,131
Purchase of mortgage loans............................... -- (24,622) (37,328) (78,830) (73,704)
Purchase of real estate and other invested assets........ (10,601) (7,126) (28,490) (31,515) (3,825)
Proceeds from sale of real estate and other invested
assets.................................................. 13,087 9,174 31,484 18,806 2,822
Change in policy loans, net.............................. (9,205) (8,283) (10,532) (12,364) (7,498)
Tax on capital gains..................................... 7 (155) (16,524) 5,136 (8,817)
Other assets, net........................................ 25,780 36,133 44,855 45,150 25,974
------------ ------------ --------- --------- ---------
Net cash provided by (used in) investing activities.... 8,196 (94,983) (148,272) (134,862) (192,144)
------------ ------------ --------- --------- ---------
Cash flows from financing activities:
Change in checks drawn in excess of bank balances........ 8,311 -- -- -- --
Deposits to policyowner account balances................. 126,688 196,846 272,431 260,172 169,118
Withdrawals from policyowner account balances............ (234,923) (207,670) (302,291) (208,313) (175,246)
Change in borrowed money, net............................ 8,594 (4,659) (1,496) (71,708) 20,974
Dividends to American Mutual Holding Company............. (4,463) (40,977) (41,156) (4,962) (310)
------------ ------------ --------- --------- ---------
Net cash (used in) provided by financing activities.... (95,793) (56,460) (72,512) (24,811) 14,536
------------ ------------ --------- --------- ---------
Net (decrease) increase in cash........................ (4,620) (23,005) (18,762) 12,677 (3,963)
Cash at beginning of year.................................. 4,620 23,382 23,382 10,705 14,668
------------ ------------ --------- --------- ---------
Cash at end of year........................................ $ -- $ 377 $ 4,620 $ 23,382 $ 10,705
------------ ------------ --------- --------- ---------
------------ ------------ --------- --------- ---------
Supplemental disclosure of cash activities:
Interest paid............................................ $ 1,154 $ 1,576 $ 2,356 $ 5,394 $ 6,991
------------ ------------ --------- --------- ---------
------------ ------------ --------- --------- ---------
Income taxes paid........................................ $ 42,000 $ 37,800 $ 51,900 $ 14,630 $ 45,172
------------ ------------ --------- --------- ---------
------------ ------------ --------- --------- ---------
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

AmerUs Life Holdings, Inc.'s (the Company) operations consist primarily of
marketing, underwriting, and distributing life insurance, annuities, and related
products to individuals throughout the United States. The Company's products are
sold through a career general agency system and a personal producing general
agency system. The life insurance and annuity operations are the Company's only
business segment.

ORGANIZATION AND PRINCIPLES OF CONSOLIDATION

The Company was formed on August 1, 1996 in conjunction with a plan of
reorganization (the Reorganization) of the former American Mutual Life Insurance
Company (American Mutual Life). Pursuant to the Reorganization which became
effective on June 30, 1996 (the Effective Date), American Mutual Life was
converted to a mutual insurance holding company structure whereby American
Mutual Holding Company (AMHC), a mutual insurance holding company, was formed.
Additionally, American Mutual Life was converted to a stock life insurance
company and renamed AmerUs Life Insurance Company (AmerUs Life). All of the
initial shares of capital stock of AmerUs Life were issued to AMHC.

On August 1, 1996, AMHC contributed all of its shares of capital stock of
AmerUs Life to AmerUs Group Co. (AmerUs Group). On the same date, the Company
was formed, and all of its shares of capital stock were issued to AmerUs Group.

American Mutual Life was previously known as Central Life Assurance Company.
American Mutual Life Insurance Company merged with and into Central Life
Assurance Company on December 31, 1994, with Central Life Assurance Company as
the surviving company existing under the name American Mutual Life Insurance
Company. The accompanying consolidated financial statements present the pooling
of interests of both companies.

Prior to the distribution (Distribution) by AmerUs Life of its Non-Life
Insurance Subsidiaries (as defined below), AmerUs Life made a capital
contribution of cash and other property (Capital Contribution) to or for the
benefit of AmerUs Properties, Inc., AmerUs Bank and Iowa Realty Co., Inc., and
each of their respective subsidiaries (Non-Life Insurance Subsidiaries). The net
assets contributed in the Capital Contribution had an aggregate carrying value
of approximately $79 million as of the date of contribution. Following the
Capital Contribution, a series of transactions was undertaken by the Company and
its affiliates. AmerUs Life effected the Distribution, pursuant to which it
distributed the Non-Life Insurance Subsidiaries to AmerUs Group. Immediately
after the Distribution, AmerUs Group contributed all of its shares of common
stock in AmerUs Life to the Company. Under this structure, the Company is an
intermediate holding company, with AmerUs Group as its direct parent company and
AmerUs Life as its wholly-owned subsidiary. Under Iowa law, AMHC is required to
retain direct or indirect ownership and control of shares representing a
majority of the vote of the outstanding capital stock of the Company.
Immediately following the Distribution, the Company entered into a bank credit
facility pursuant to which it borrowed $100 million in term debt and $75 million
under a revolving line of credit (Bank Credit Facility). The Company used the
proceeds from such borrowings to make a $125 million capital contribution to
AmerUs Life and to purchase a $50 million surplus note from AmerUs Life.

The effect of the Distribution was to decrease (increase) net income by the
net income (loss) of $10,539,000, ($101,000), and $6,055,000 in 1995, 1994, and
1993, respectively, of Lartnec Investment Co., a former subsidiary of AmerUs
Life, and its subsidiaries (collectively, Lartnec).

As a result of the Reorganization, AMHC will own 14,500,000 shares of Class
A Common Stock and 5,000,000 shares of Class B Common Stock of the Company. The
Class B Common Stock must be held,

F-7
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

directly or indirectly, by AMHC, which must have a majority of the outstanding
Common Stock of both classes. The Class B Common Stock is generally convertible
on a share-for-share basis for Class A Common Stock.

The accompanying consolidated financial statements include only the accounts
and operations, after intercompany eliminations, of AmerUs Life Holdings, Inc.
and its wholly owned subsidiaries, principally, AmerUs Life Insurance Company
and American Vanguard Life Insurance Company (American Vanguard Life).

The Reorganization contained an arrangement, known as a closed block, to
provide for dividends on policies that were in force on the Effective Date and
were within the classes of individual policies for which the Company had a
dividend scale in effect at the time of the Reorganization. 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 block until the block is no longer in effect. The Company will
not be required to support the payment of dividends on closed block policies
from its general funds.

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles (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.

BASIS OF PRESENTATION

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

The insurance company subsidiaries have adopted SFAS 120, "Accounting and
Reporting by Mutual Life Insurance Enterprises and by Insurance Enterprises for
Certain Long-Duration Participating Contracts." SFAS 120 permits stock life
insurance companies to apply the provisions of the American Institute of
Certified Public Accountant's Statement of Position 95-1, "Accounting for
Certain Insurance Activities of Mutual Life Insurance Enterprises," to
participating life insurance contracts that meet the conditions in SFAS 120. The
accompanying consolidated financial statements have been restated for the
effects of implementing SFAS 120.

INTERIM FINANCIAL INFORMATION

The consolidated financial statements as of September 30, 1996, and for the
nine-month periods ended September 30, 1996 and 1995, and related disclosures in
these notes have not been audited. The interim consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and notes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals unless
noted otherwise herein) considered necessary for a fair presentation have been
included. Operating results for the nine-month period ended September 30, 1996,
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1996.

F-8
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Summarized financial information of the Closed Block as of September 30,
1996, is as follows (in thousands):

<TABLE>
<CAPTION>
(UNAUDITED)
-------------
<S> <C>
Assets:
Fixed maturities, at fair value.............................................. $ 843,809
Equity securities............................................................ 15,488
Short-term investments....................................................... 718
Policy loans................................................................. 165,263
Accrued investment income.................................................... 8,357
Other assets................................................................. 7,358
Deferred acquisition costs................................................... 196,146
-------------
Total assets............................................................... $ 1,237,139
-------------
-------------
Liabilities:
Future life and annuity policy benefits...................................... $ 1,339,695
Policyowner funds............................................................ 24,617
Dividends payable to policyowners............................................ 131,906
Policy and contract claims................................................... 5,051
-------------
Total liabilities.......................................................... $ 1,501,269
-------------
-------------
</TABLE>

INVESTMENTS

Investments in fixed maturity and equity securities 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 from changes
in the fair value of these securities are reflected as a component of
policyowners' equity. These unrealized gains or losses in policyowners' equity
are reported net of taxes and adjustments to deferred policy acquisition costs.

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. 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.

Mortgage loans on real estate 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. Real estate acquired by
foreclosure is stated at the lower of cost or fair value less estimated costs to
sell.

Investments in real estate and mortgage loans on 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 fair values. The
Company adjusts real estate and mortgage loans on real estate 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 mortgage loans on 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.

F-9
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INTEREST RATE SWAPS AND CAPS

The Company uses interest rate swaps and caps as part of its overall
interest rate risk management strategy for certain life insurance and annuity
products. Gains and losses on those instruments are included in the carrying
value of the underlying hedged investments, or anticipated investment
transactions, and are amortized over the remaining lives of the hedged
investments as adjustments to investment income. Any unamortized gains or losses
are recognized when the underlying investments are sold.

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 other expense over the life of the
agreement. Periodic payments that are receivable as a result of the agreements
are accrued as an adjustment of interest income or benefits from the hedged
item.

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 amortization method of
deferred policy acquisition costs for traditional life insurance products is
different, 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 surplus. Deferred policy acquisition costs for participating
traditional life insurance are being amortized over the life of the policies
generally in proportion to the present value of estimated gross margins.
Non-participating traditional life insurance deferred policy acquisition costs
are being 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 being amortized generally 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 profits or margins on the underlying policies
vary from previous estimates. Deferred policy acquisition costs are adjusted for
the impact on estimated gross profits of net unrealized gains and losses on
securities.

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 useful life 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.

F-10
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FUTURE POLICY BENEFITS

The liability for future policy benefits for traditional life insurance is
computed using a 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 7.25 percent.
The weighted average assumed interest rate for all traditional life policy
reserves was 4.20 percent in 1995, 4.10 percent in 1994, and 4.00 percent in
1993. 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 rate for universal life products was 6.67 percent in 1995, 6.44
percent in 1994, and 6.59 percent in 1993. The weighted average interest
crediting rate for annuity products was 6.16 percent in 1995, 6.41 percent in
1994, and 6.95 percent in 1993.

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 68 percent of the Company's
individual life policies in force.

PROPERTY AND EQUIPMENT

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

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, 1995, 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 recognizes pension costs for its defined benefit plans in
accordance with SFAS 87, "Employers' Accounting for Pensions." Pension costs are
funded according to regulations provided under the Internal Revenue Code.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

Under SFAS 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions," the cost of postretirement benefits must be recognized on an
accrual basis as employees perform services to earn the benefits. The Company
adopted SFAS 106 as of January 1, 1993. Prior to 1993, the cost of retiree
health care and life insurance benefits was recognized as an expense when paid.

INCOME TAXES

The Company and its subsidiaries, with the exception of American Vanguard
Life, file a consolidated federal income tax return with the Non-Life Insurance
Subsidiaries. The separate return method is used

F-11
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.

PENDING ACCOUNTING STANDARDS

In March 1995, the Financial Accounting Standards Board issued SFAS 121
"Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to
Be Disposed Of." This statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable and an impairment loss must be recognized.

SFAS 121 is effective for the Company commencing January 1, 1996. The
Company believes that the adoption of this statement in 1996 will have an
immaterial impact on its results of operations, financial condition, and
liquidity.

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 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 minimizes this risk by adhering to a
conservative investment strategy, maintaining sound reinsurance and credit and
collection policies, and providing allowances or reserves for any amounts deemed
uncollectible.

(2) INVESTMENTS
On December 31, 1993, the Company adopted SFAS 115, "Accounting for Certain
Investments in Debt and Equity Securities," which expands the use of fair value
accounting for those securities that a company does not have positive intent and
ability to hold to maturity. Implementation of SFAS 115 increased policyowners'
equity by $45.8 million, which reflected the unrealized appreciation of fixed
maturity securities available for sale, net of related deferred policy
acquisition costs and deferred taxes.

F-12
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(2) INVESTMENTS (CONTINUED)
The Company's investments are classified as available-for-sale securities
and are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------- ----------- ----------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Available-for-sale securities at
December 31, 1995:
Fixed maturity securities:
Corporate bonds.................. $ 1,977,567 $ 160,486 $ 6,208 $ 2,131,845
U.S. government bonds............ 65,513 1,652 -- 67,165
Foreign government bonds......... 20,149 2,267 -- 22,416
Mortgage-backed bonds............ 886,470 33,837 1,323 918,984
State and municipal bonds........ 1,550 136 -- 1,686
------------- ----------- ----------- -------------
$ 2,951,249 $ 198,378 $ 7,531 $ 3,142,096
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
Equity securities.................. $ 52,869 $ 57,380 $ 574 $ 109,675
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
Short-term investments............. $ 39,276 $ 77 $ -- $ 39,353
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------

GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------- ----------- ----------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Available-for-sale securities at
December 31, 1994:
Fixed maturity securities:
Corporate bonds.................. $ 1,754,413 $ 19,003 $ 73,277 $ 1,700,139
U.S. government bonds............ 47,682 44 390 47,336
Foreign government bonds......... 12,147 80 226 12,001
Mortgage-backed bonds............ 847,390 4,945 47,272 805,063
State and municipal bonds........ 2,353 10 134 2,229
------------- ----------- ----------- -------------
$ 2,663,985 $ 24,082 $ 121,299 $ 2,566,768
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
Equity securities.................. $ 112,992 $ 70,578 $ 4,800 $ 178,770
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
Short-term investments............. $ 8,529 $ -- $ -- $ 8,529
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
</TABLE>

The amortized cost and estimated fair value of investments in fixed maturity
securities at December 31, 1995, are summarized by stated maturity as follows:

<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE
----------------------------
AMORTIZED
COST FAIR VALUE
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Maturity:
Due in 1996................................................... $ 36,689 $ 36,955
Due in 1997 - 2001............................................ 408,834 432,572
Due in 2002 - 2006............................................ 1,149,125 1,235,078
Due after 2006................................................ 470,131 518,507
Mortgage-backed securities...................................... 886,470 918,984
------------- -------------
$ 2,951,249 $ 3,142,096
------------- -------------
------------- -------------
</TABLE>

F-13
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(2) INVESTMENTS (CONTINUED)
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, 1995,
using Standard & Poor's rating service, are summarized as follows (in
thousands):

<TABLE>
<CAPTION>
Treasuries and AAA............................................. $ 983,804
<S> <C>
AA............................................................. 51,439
A.............................................................. 597,502
BBB............................................................ 1,313,014
BB............................................................. 167,366
Less than BB................................................... 28,971
----------
$3,142,096
----------
----------
</TABLE>

The Company's investment in non-income producing fixed maturity securities
and real estate was $9.7 million as of December 31, 1995.

Major categories of investment income are summarized as follows:

<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Fixed maturity securities.............................. $ 231,208 $ 206,346 $ 201,203
Equity securities...................................... 6,311 7,821 5,834
Mortgage loans on real estate.......................... 33,738 55,181 57,031
Real estate............................................ 9,729 9,907 6,708
Policy loans........................................... 14,043 12,745 12,572
Other.................................................. 5,211 2,329 722
----------- ----------- -----------
Gross investment income............................ 300,240 294,329 284,070
Investment expenses.................................... 14,996 18,638 14,216
----------- ----------- -----------
Net investment income.............................. $ 285,244 $ 275,691 $ 269,854
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

Investment expenses include depreciation on real estate of $2.9 million,
$2.0 million and $2.0 million in 1995, 1994, and 1993, respectively.

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

<TABLE>
<CAPTION>
1995 1994 1993
--------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities:
Gross realized gains.................................. $ 18,652 $ 10,879 $ 18,679
Gross realized losses................................. (9,240) (36,423) (6,809)
Equity securities:
Gross realized gains.................................. 45,419 14,746 10,095
Gross realized losses................................. (3,634) (5,181) (2,887)
Other investments......................................... 812 (2,744) (642)
Net provision for losses--mortgage loans on real estate... (622) (1,207) (2,976)
--------- ---------- ---------
$ 51,387 $ (19,930) $ 15,460
--------- ---------- ---------
--------- ---------- ---------
</TABLE>

F-14
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(2) INVESTMENTS (CONTINUED)
The unrealized appreciation (depreciation) on invested assets available for
sale is reported as a separate component of policyowners' equity, reduced by
adjustments to deferred acquisition costs 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 (in thousands) is as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1995 1994 1993
----------- ---------- -----------
<S> <C> <C> <C>
Unrealized appreciation (depreciation):
Fixed maturity securities............................ $ 190,847 $ (97,217) $ 153,744
Equity securities.................................... 56,806 65,778 87,247
Short-term investments............................... 77 -- --
Other investments...................................... 6,335 (2,277) 211
Deferred policy acquisition costs...................... (88,039) 56,102 (81,492)
Deferred income taxes.................................. (57,312) (7,066) (55,129)
----------- ---------- -----------
$ 108,714 $ 15,320 $ 104,581
----------- ---------- -----------
----------- ---------- -----------
</TABLE>

The change in unrealized appreciation (depreciation) on fixed maturity
securities was $288 million, ($251) million, and $154 million in 1995, 1994 and
1993, respectively; the corresponding amounts for equity securities were ($9)
million, ($21) million, and $11 million.

At December 31, 1995 and 1994, investments in fixed maturity securities with
a carrying amount of $2.4 million and $2.3 million, respectively, were on
deposit with state insurance departments to satisfy regulatory requirements.

No investment in any person or its affiliates exceeded 10 percent of
policyowners' equity at December 31, 1995.

(3) MORTGAGE LOANS ON REAL ESTATE
Mortgage loans on real estate consist almost entirely of commercial mortgage
loan investments, substantially all of which are made on a full recourse basis
and consist primarily of fixed-rate first mortgages on completed properties. The
following table sets forth additions, reductions from payments, and other
charges and foreclosures related to the mortgage loan portfolio (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Commercial loans:
Beginning balance................................................. $ 504,034 $ 723,602
Additions......................................................... 39,933 75,275
Payments and miscellaneous charges................................ (146,496) (280,871)
Foreclosed properties............................................. (18,057) (13,972)
------------ ------------
Ending balance.................................................... 379,414 504,034
Residential and other mortgage loans.............................. 4,250 9,178
Valuation allowance............................................... (30,067) (65,549)
------------ ------------
Total mortgage loans.......................................... $ 353,597 $ 447,663
------------ ------------
------------ ------------
</TABLE>

F-15
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(3) MORTGAGE LOANS ON REAL ESTATE (CONTINUED)
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 portfolio
credit risk for mortgage loans was concentrated in the following geographic
regions (dollar amounts in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------
1995 1994
------------------------ ------------------------
NUMBER AMOUNT NUMBER AMOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Commercial:
California................................... 31 $ 69,946 42 $ 90,482
Florida...................................... 6 21,964 9 28,677
Iowa......................................... 56 95,837 66 108,944
Kansas....................................... 14 29,249 16 39,643
Texas........................................ 9 28,053 14 59,233
Washington................................... 8 15,172 10 28,949
Other........................................ 88 119,193 109 148,106
Residential.................................... 95 4,250 196 9,178
Valuation allowance............................ -- (30,067) -- (65,549)
--- ----------- --- -----------
307 $ 353,597 462 $ 447,663
--- ----------- --- -----------
--- ----------- --- -----------
</TABLE>

At December 31, 1995, the Company's investment in mortgage loans included
$77.4 million in loans that are considered to be impaired, for which the related
allowance for credit losses is $16.9 million. The average recorded investment in
impaired loans during the year ended December 31, 1995, was $86.9 million. For
the year ended December 31, 1995, the Company recorded $6.9 million in interest
income on those impaired loans.

No mortgage loan on any one individual property exceeds $14 million at
December 31, 1995.

Provisions for losses are summarized as follows :

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year............................. $ 65,549 $ 80,220 $ 81,040
---------- ---------- ---------
Provisions for losses - mortgage loans................... 622 1,207 2,976
Provision on mortgages sold/transferred to real estate... (36,104) (15,878) (3,796)
---------- ---------- ---------
Net decrease for year.................................. (35,482) (14,671) (820)
---------- ---------- ---------
Balance at end of year................................... $ 30,067 $ 65,549 $ 80,220
---------- ---------- ---------
---------- ---------- ---------
</TABLE>

F-16
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(4) DEFERRED POLICY ACQUISITION COSTS
A summary of the policy acquisition costs deferred and amortized are as
follows (in thousands):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
Balance at beginning of year.......................... $ 404,361 $ 255,085 $ 335,318
Policy acquisition costs deferred..................... 57,730 54,438 48,700
Policy acquisition costs amortized.................... (50,239) (42,756) (47,441)
Change in unrealized (gain) loss on available-for-sale
securities........................................... (144,141) 137,594 (81,492)
------------ ----------- -----------
Balance at end of year................................ $ 267,711 $ 404,361 $ 255,085
------------ ----------- -----------
------------ ----------- -----------
</TABLE>

The components of the deferred policy acquisition costs are as follows (in
thousands):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Universal life insurance and annuity products.......... $ 144,262 $ 224,078 $ 151,038
Participating traditional life insurance............... 103,250 160,780 86,132
Non-participating traditional life insurance........... 20,199 19,503 17,915
----------- ----------- -----------
$ 267,711 $ 404,361 $ 255,085
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

Commissions represent over 85 percent of policy acquisition costs deferred.

F-17
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(5) DEBT
Debt at December 31, 1995 and 1994, consists of the following (in
thousands):

<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Short-term:
Line of credit with Federal Home Loan Bank - interest is paid at a rate of
5.70% at December 31,1995.The agreement provides for maximum borrowings of
$50,000,000. The Company has assigned all Federal Home Loan Bank stock and has
assigned other securities as collateral on the line of credit................. $ -- $ 3,665
Long-term:
The Iowa Housing Finance Authority variable rate (5.35% at December 31,1995)
demand Multi-Family Housing Bond Series 1985-A................................ 8,813 8,948
Federal Home Loan Bank community investment long-term advances with a weighted
average interest rate of 6.54% at December 31, 1995 maturing at various dates
through July 2010............................................................. 11,765 --
The Housing and Redevelopment Authority of the City of St. Paul, Minnesota,
demand rental housing development revenue bonds Series 1985-A were repaid in
1995.......................................................................... -- 3,884
Class A certificate holders of 1988-1 REMIC with a weighted average interest
rate of 9.00% at December 31, 1995............................................ 15,883 21,268
Other............................................................................ -- 192
--------- ---------
$ 36,461 $ 37,957
--------- ---------
--------- ---------
</TABLE>

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

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Year ending December 31:
1996.......................................................................... $ 16,136
1997.......................................................................... 8,911
1998.......................................................................... 202
1999.......................................................................... 216
2000.......................................................................... 232
Thereafter.................................................................... 10,764
--------------
$ 36,461
--------------
--------------
</TABLE>

At December 31, 1995, the carrying value of the securities assigned to the
Federal Home Loan Bank as collateral on the line of credit and long-term
advances totaled $27 million. The bonds are collateralized by certain mortgage
loans held by the Company with a carrying value of $12 million at December 31,
1995.

Interest paid totaled $0.6 million, $1.7 million and $0.3 million in 1995,
1994, and 1993, respectively.

F-18
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(6) FEDERAL INCOME TAXES
Comprehensive federal income tax expense is summarized as follows:

<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Income tax expense on:
Operations......................................................... $ 41,202 $ 19,464 $ 21,352
Unrealized holding gains (losses) on available-for-sale
securities........................................................ 50,246 48,063 (28,975)
Accounting change for postretirement benefits...................... -- -- (1,731)
--------- --------- ---------
$ 91,448 $ 67,527 $ (9,354)
--------- --------- ---------
--------- --------- ---------
</TABLE>

The effective income tax rate on pre-tax income before cumulative effect of
changes in accounting principles is higher than the prevailing corporate federal
income tax rate and is summarized as follows:

<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Corporate federal income tax rate...................................... 35.00% 35.00% 35.00%
Differential earnings amount........................................... -- 36.68 --
Tax-exempt investment income........................................... (.24) (1.66) (.59)
Cumulative effect of tax rate change................................... -- -- 1.57
Merger expenses........................................................ .48 2.29 --
Other items, net....................................................... 2.03 2.18 2.30
----- ----- -----
Effective tax rate................................................. 37.27% 74.49% 38.28%
----- ----- -----
----- ----- -----
</TABLE>

The differential earnings amount is an equity add-on tax which mutual life
insurance companies are required to pay. The amount is determined annually and
is calculated by comparing the earnings rate of mutual life insurance companies
and certain stock life insurance companies. In certain years, such as 1993 and
1995, the calculations have resulted in negative adjustments with no additional
tax amount to be paid.

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

<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Current............................................................. $ 44,307 $ 16,862 $ 31,386
Deferred............................................................ (3,105) 2,602 (10,034)
--------- --------- ----------
Total federal income tax expense................................ $ 41,202 $ 19,464 $ 21,352
--------- --------- ----------
--------- --------- ----------
</TABLE>

F-19
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(6) FEDERAL INCOME TAXES (CONTINUED)
The significant components of net deferred income tax assets and liabilities
are summarized as follows:

<TABLE>
<CAPTION>
1995 1994
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Deferred income tax assets:
Policy reserves and policyholder funds.................................... $ 106,813 $ 101,509
Policy acquisition costs capitalized for tax.............................. 26,588 21,208
Net unrealized depreciation on available-for-sale securities.............. -- 11,801
Deferred policy acquisition costs related to unrealized appreciation...... 30,813 --
Deferred compensation..................................................... 10,134 7,109
Other..................................................................... 23,344 31,422
------------ ------------
Total gross deferred income tax assets.................................. 197,692 173,049
Deferred income tax liabilities:
Deferred policy acquisition costs......................................... (124,513) (121,891)
Net unrealized appreciation on available-for-sale securities.............. (88,922) --
Deferred policy acquisition costs related to unrealized depreciation...... -- (19,636)
Reinsurance receivable.................................................... (23,403) (22,838)
Other..................................................................... (9,477) (10,166)
------------ ------------
Total gross deferred tax liability...................................... (246,315) (174,531)
------------ ------------
Net deferred income tax liability....................................... $ (48,623) $ (1,482)
------------ ------------
------------ ------------
</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 net deferred tax asset, and, therefore, no such valuation
allowance has been established.

Federal income tax returns for the Company for years through 1987 are closed
to further assessment of taxes. Examinations of federal income tax returns for
1988 and 1989 have been made by the Internal Revenue Service. The Internal
Revenue Service is examining federal income tax returns of the Company for 1990
through 1992. Management believes adequate provisions have been made for any
additional taxes which may become due with respect to open years.

Income taxes paid by the Company totaled $51.9 million, $14.6 million, and
$45.2 million in 1995, 1994, and 1993, respectively.

(7) DEFINED BENEFIT PENSION PLANS

The Company has defined benefit pension plans which cover substantially all
of the Company's employees, as well as employees of certain companies directly
or indirectly owned by the Company.

F-20
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(7) DEFINED BENEFIT PENSION PLANS (CONTINUED)
The plans provide for benefits based upon years of service and the employee's
compensation. Information for the Company's portion of the plans' funded status
is not available. The following information presents the plans' funded status
and pension cost, based upon measurement dates of December 31, 1995 and 1994
(prior to revaluation for curtailment of the plans):

<TABLE>
<CAPTION>
1995 1994
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of accumulated benefit obligation, including
vested benefits of $45,505 and $37,331 in 1995 and 1994,
respectively........................................................ $ (45,505) $ (38,750)
---------- ----------
---------- ----------
Projected benefit obligation for service rendered to date-- includes
effect of increase in compensation levels........................... $ (45,505) $ (45,697)
Plans' assets at fair value, primarily consisting of mutual funds and
certificates of deposit............................................. 52,592 47,017
---------- ----------
Plans' assets in excess of projected benefit obligations............. 7,087 1,320
Unrecognized (gain) loss from actual experience difference from
assumed and effects of changes in assumptions....................... (2,745) 376
Unrecognized prior service cost...................................... -- (1,473)
Net unrecognized obligation at January 1, 1988 and 1987, being
amortized over 15 years............................................. -- 54
---------- ----------
Prepaid pension cost................................................. $ 4,342 $ 277
---------- ----------
---------- ----------
</TABLE>

<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost--benefits earned during year................... $ 1,768 $ 2,325 $ 2,058
Interest cost on projected benefit obligation............... 3,609 3,282 3,155
Actual return on plan assets................................ (3,729) (3,632) (3,769)
Net amortization and deferral............................... (114) (37) 391
Special termination benefits due to early retirement........ -- 1,597 993
--------- --------- ---------
Defined benefit pension cost............................ $ 1,534 $ 3,535 $ 2,828
--------- --------- ---------
--------- --------- ---------
Company's portion of net pension cost....................... $ 696 $ 2,578 $ 1,267
--------- --------- ---------
--------- --------- ---------
</TABLE>

The weighted average discount rate was 7.25 percent, 8.00 percent, and 7.45
percent in 1995, 1994, and 1993, respectively. The rate of increase in future
compensation levels was 5.50 percent, 5.00 percent, and 6.9 percent in 1995,
1994, and 1993, respectively. The expected long-term rate of return on assets
was 8.00 percent, 7.50 percent, and 7.60 percent in 1995, 1994, and 1993,
respectively.

During 1993, the Company offered an early retirement plan to qualifying
employees based on age and years of service. The Company's portion of the loss
recognized for the years ending December 31, 1994 and 1993, from the curtailment
and special termination benefits for the plan was approximately $1.6 million and
$.4 million, respectively.

The Company has frozen the defined benefit pension plans effective December
31, 1995, and has recognized their portion of a curtailment gain amounting to
$6.2 million, or $3.1 million after federal excise taxes, as other revenues.
Effective January 1, 1996, the defined benefit pension plans have been replaced
by a defined contribution savings and retirement plan which also replaces the
Company's defined contribution pension plans.

F-21
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(7) DEFINED BENEFIT PENSION PLANS (CONTINUED)
DEFINED CONTRIBUTION PENSION PLANS

The Company has three defined contribution 401(k) plans which cover
substantially all employees. The Company's total contribution under the plans
amounted to $.4 million, $.6 million, and $.7 million for the years ended
December 31, 1995, 1994, and 1993, respectively. Effective January 1, 1996, the
defined contribution 401(k) plans together with the defined benefit pension
plans have been replaced by a single defined contribution savings and retirement
plan.

NONQUALIFIED PENSION PLAN

The Company also has a nonqualified pension plan covering substantially all
of its career and general agents. Accumulated benefits of the plan are unfunded
and have been included in other liabilities at December 31, 1995 and 1994,
amounting to $13.6 million and $10.9 million, respectively.

POSTRETIREMENT PLANS

The Company has postretirement benefit plans to provide certain eligible
participants and dependents with certain medical, dental, and life insurance
benefits. As discussed in note 1, the Company adopted SFAS 106 as of January 1,
1993, based on a separate actuarial valuation report. The Company's transition
obligation as of January 1, 1993, amounted to $3.2 million, net of income tax
benefits of $1.7 million, and was recorded as a cumulative effect adjustment to
income. The Company's plan for medical and life insurance benefits is combined
with that of the subsidiaries of AMHC. Information for the Company's individual
funded status for 1995 and 1994 is not available. The following information is
presented on a combined plan basis accompanied by the Company's portion of the
net periodic postretirement benefit expense and sets forth the combined
postretirement benefit plans' funded status at December 31, 1995 and 1994:

<TABLE>
<CAPTION>
1995 1994
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Fully eligible active plan participants................................ $ 491 $ 425
Other active plan participants......................................... 1,716 1,724
Retirees............................................................... 6,121 5,481
--------- ---------
Accumulated postretirement benefit obligation............................ 8,328 7,630
Unrecognized prior service cost.......................................... (27) --
Unrecognized (loss) gain................................................. (167) 124
--------- ---------
Accrued postretirement benefit cost...................................... $ 8,134 $ 7,754
--------- ---------
--------- ---------
</TABLE>

Net periodic postretirement benefit expense for 1995, 1994, and 1993
included the following components:

<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost....................................................... $ 248 $ 268 $ 153
Interest cost...................................................... 586 521 373
Net amortization and deferral...................................... 5 19 --
Curtailment and special termination benefits....................... -- -- 613
--------- --------- ---------
Net periodic postretirement benefit expense.................... $ 839 $ 808 $ 1,139
--------- --------- ---------
--------- --------- ---------
Company's portion of net periodic postretirement benefit expense... $ 639 $ 426 $ 727
--------- --------- ---------
--------- --------- ---------
</TABLE>

F-22
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(7) DEFINED BENEFIT PENSION PLANS (CONTINUED)
The weighted-average annual assumed rate of increase in the per capita cost
of covered benefits (i.e., health care cost trend rate) for the medical and
dental plan is approximately 9.00 percent, 9.50 percent, and 10.00 percent for
1995, 1994, and 1993, respectively, and is assumed to decrease gradually to 5.50
percent over nine years and remain at that level thereafter. The health care
cost trend rate assumption has a significant effect on the amounts reported. For
example, increasing the assumed health care cost trend rates by one percentage
point in each year would increase the accumulated postretirement benefit
obligation for the medical plan as of December 31, 1995 and 1994, by 7.70
percent and 4.50 percent, respectively, and the aggregate of the service and
interest cost components of net periodic postretirement benefit expense for
1995, 1994, and 1993 by $.06 million, $.02 million, and $.03 million,
respectively, on a combined basis. The weighted-average discount rate used in
determining the accumulated postretirement benefit obligation was 7.25 percent,
8.00 percent, and 7.57 percent as of December 31, 1995, 1994, and 1993,
respectively.

(8) RELATED PARTY TRANSACTIONS

The Company has financed approximately $7.4 million at December 31, 1995, of
indebtedness of a subsidiary of Lartnec, receiving interest in the amount of $.8
million in both 1995 and 1994. The Company pledged bonds and securities with a
carrying value of $107 million at December 31, 1995, as collateral for
affiliates' indebtedness, including the collateral pledged for the credit
arrangements discussed in note 5.

The following summarizes transactions of the Company with Lartnec and its
subsidiaries in 1995, 1994, and 1993:

<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Capital contributions...................................... $ 41,157 $ 4,959 $ 310
Management, administrative, data processing, and other
services fees charged to certain subsidiaries of
Lartnec................................................... 9,164 8,162 7,500
Investments in bonds and accrued interest in Lartnec and
subsidiaries as of December 31............................ 12,868 17,242 20,813
Investments in mortgage loans from joint ventures in which
a subsidiary of Lartnec has a partnership interest at
December 31............................................... 16,275 30,775 40,500
Payable to a subsidiary of Lartnec for purchase of
commercial mortgage loans at December 31.................. 6,520 -- --
Transfer of partnership interests in certain joint ventures
to a subsidiary of Lartnec................................ 1,697 -- --
Real estate management fees charged by a subsidiary of
Lartnec................................................... 2,555 1,301 1,811
</TABLE>

(9) REINSURANCE

At December 31, 1995, the Company's maximum retention limit for acceptance
of risk on life insurance was $1 million. The retention limit for certain
policies issued prior to July 1, 1985, was $125,000 and for certain policies
issued after June 30, 1985, and before December 1, 1994, was $250,000. There are
reinsurance agreements with various companies whereby insurance in excess of
these retention limits are reinsured. Insurance in-force ceded to nonaffiliated
companies under risk sharing arrangements at December 31, 1995, 1994, and 1993,
totaled approximately $2,916 million, $3,265 million, and $3,247 million,
respectively.

F-23
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(9) REINSURANCE (CONTINUED)
Total life premiums ceded amounted to $14.2 million, $13.7 million, and
$15.3 million in 1995, 1994, and 1993, respectively. Total life premiums assumed
amounted to $4.9 million, $7.9 million, and $8.5 million, respectively.

To the extent that reinsuring companies are unable to meet obligations under
these agreements, the Company remains liable. 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

Lartnec had various credit lines and arrangements totaling $94 million at
December 31, 1995. Approximately $92 million was outstanding under these
agreements at December 31, 1995, which are collateralized by Company investments
of approximately $107 million.

The Company guarantees the payment of 60 percent of a pool of mortgage loans
and the related interest, previously sold to an unrelated party. The outstanding
balance of such mortgage loans subject to this repayment guarantee at December
31, 1995, was approximately $13 million.

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 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. At December 31, 1995, outstanding commitments to
extend credit totaled approximately $6 million.

AmerUs Life is a defendant in a class action lawsuit which was brought on
August 31, 1995 in the District Court for Travis County, Texas. The complaint,
which seeks unspecified damages, was filed by former policyowners on behalf of
themselves and all similarly situated persons who purchased individual life
insurance policies which were underwritten and sold by AmerUs Life within Texas
and which were based upon uniform sales presentations and policy illustrations
from and after 1980 using a "vanishing premium" concept. AmerUs Life has denied
the allegations contained in such complaint, including the existence of a
legitimate class. The litigation is in the discovery stage and a hearing on
certification of the class currently is scheduled to occur in December, 1996.
The litigation is being vigorously defended by AmerUs Life. The parties are
engaged in court-ordered mediation with respect to this action.

A class action lawsuit also was filed in June 1996 in the United States
District Court for the Northern District of California. The complaint alleges
that AmerUs Life improperly passed an increase in its corporate income taxes
(known as the deferred acquisition cost, or DAC, tax) through to policyowners in
breach of the terms of its life (other than traditional whole life) and annuity
policies. The plaintiff, an insured under a universal life policy issued by
Central Life, seeks unspecified damages and injunctive relief on behalf of
himself and all policyowners of AmerUs Life with universal life, term and
"blended" life insurance policies and annuities. AmerUs Life has denied the
allegations contained in such complaint, including the existence of a legitimate
class. The litigation is in the early discovery stage and a hearing on
certification of the class has not yet been scheduled. The litigation is being
vigorously defended by AmerUs Life.

In the ordinary course of business, the Company and subsidiaries are also
engaged in certain other litigation, none of which management believes is
material.

F-24
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(11) POLICYOWNERS' EQUITY

Generally, the policyowners' surplus of the Company's insurance subsidiaries
available for distribution to the Company are 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 1996, the Company's insurance subsidiaries could distribute
approximately $40 million in the form of dividends to the Company without prior
approval of such regulatory authorities. However, as a result of the spin off,
the Company will not be able to pay additional dividends in the 12-month period
following the Distribution of the Non-Life Insurance Subisidiaries without the
prior approval of the Iowa Commissioner.

The Company made additional contributions to the Non-Life Insurance
Subisidiaries amounting to $41.0 million, $5.0 million, and $0.3 million in
1995, 1994, and 1993, respectively, which have been considered dividends to AMHC
as a result of the Distribution.

(12) STATUTORY ACCOUNTING PRACTICES
The Company's statutory net income was $49.3 million, $20.8 million and
$28.2 million for 1995, 1994, and 1993, respectively.

The Company's statutory surplus and capital was $155.1 million and $183.6
million at December 31, 1995 and 1994, respectively.

The pro forma unaudited statutory surplus and capital as of September 30,
1996, after the Reorganization and assuming the consummation of the Distribution
and the Capital Contribution, is as follows (in millions):

<TABLE>
<CAPTION>
(UNAUDITED)
-------------
<S> <C>
Statutory surplus and capital at September 30, 1996............................. $ 289
Distribution.................................................................... (79)
Capital Contribution............................................................ (127)
Capital contribution to AmerUs Life............................................. 175
-----
Pro forma statutory surplus and capital at September 30, 1996................... $ 258
-----
-----
</TABLE>

The Company's insurance subsidiaries are domiciled in Iowa and prepare their
statutory-basis financial statements in accordance with accounting practices
prescribed or permitted by the Iowa Department of Commerce (Iowa Department).
Prescribed statutory accounting practices include state laws, regulations, and
general administrative rules, as well as a variety of publications of the
National Association of Insurance Commissioners (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 currently is in
the process of codifying statutory accounting practices, the result of which is
expected to constitute the only source of prescribed statutory accounting
practices. Accordingly, that project, which is expected to be completed in 1997,
will likely change, to some extent, prescribed statutory accounting practices
and may result in changes to the accounting practices that insurance enterprises
use to prepare their statutory financial statements.

The Company does not utilize any permitted practices in the preparation of
its statutory-basis financial statements which would have a material impact on
statutory surplus.

The Iowa Department imposes minimum risk-based capital requirements on
insurance enterprises that were developed by the National Association of
Insurance Commissioners (NAIC). The formulas for determining the amount of
risk-based capital (RBC) specify various weighting factors that are applied to
financial balances or various levels of activity based on the perceived degree
of risk. Regulatory

F-25
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(12) STATUTORY ACCOUNTING PRACTICES (CONTINUED)
compliance is determined by a ratio (the 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.

Each of the Company's insurance subsidiaries has a Ratio that is at least
400 percent of the minimum RBC requirements; accordingly, the Company's
subsidiaries meet the RBC requirements.

(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 and caps) 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 master netting agreements with its counterparties.

The credit risk on all financial instruments, whether on or off the balance
sheet, is controlled through an on-going 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.

At December 31, 1995, 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>
NOTIONAL CARRYING FAIR
AMOUNT VALUE VALUE
----------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest rate caps................................................. $ 450,000 $ 4,112 $ 4,110
Received fixed..................................................... 150,000 11,887 11,887
Pay fixed.......................................................... 150,000 (3,392) (3,392)
----------- --------- ---------
$ 750,000 $ 12,607 $ 12,605
----------- --------- ---------
----------- --------- ---------
</TABLE>

There were no material derivative positions at December 31, 1994.

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. The interest rate swap agreements, which expire
in 1999, generally involve the exchange of fixed and floating rate interest
payments, without an exchange of the underlying principal. The interest rate cap
agreements, which expire between 1996 and 2000, involve the payment of a maximum
fixed interest rate when an indexed rate exceeds that fixed rate. 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

F-26
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(13) FINANCIAL INSTRUMENTS (CONTINUED)
and interest paid or received was an increase of $1.5 million for 1995. There
were no material effects in 1994 and 1993. 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. There were no net deferred gains on interest rate exchange
agreements as of December 31, 1995, 1994, and 1993.

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

<TABLE>
<CAPTION>
DECEMBER 31, 1995
-----------------------------------------------------
TOTAL NET
NOTIONAL UNREALIZED UNREALIZED UNREALIZED
VALUE GAINS LOSSES GAINS (LOSSES)
----------- ----------- ----------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Received fixed.................................. $ 150,000 $ 11,887 $ -- $ 11,887
Pay fixed....................................... 150,000 -- 3,392 (3,392)
Interest rate caps.............................. 450,000 183 2,518 (2,335)
----------- ----------- ----------- --------------
$ 750,000 $ 12,070 $ 5,910 $ 6,160
----------- ----------- ----------- --------------
----------- ----------- ----------- --------------
</TABLE>

The Company is exposed to credit loss in the event of nonperformance by
counterparties on interest rate cap and interest rate swap agreements. The
Company does not anticipate nonperformance by any of these counterparties. The
credit risk associated with such agreements is minimized by purchasing such
agreements from financial institutions with long-standing, superior performance
records. The amount of such exposure is essentially their replacement cost,
which is approximated by the unrealized gains in such contracts.

The Company has no current exposure to the counterparty when a contract
contains an unrealized loss.

MATURITY SCHEDULE BY YEAR FOR DERIVATIVE PRODUCTS

<TABLE>
<CAPTION>
1996 1997 1998 1999 2000
--------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Receive fixed swaps:
Notional amount (in thousands).......... $ 150,000
Weighted average:
Receive rate............................ 7.86% 7.86% 7.86% 7.86%
Pay rate (A)............................ 5.45% 5.06% 5.59% 5.89%
Pay fixed swaps:
Notional amount (in thousands).......... $ 150,000
Weighted average:
Receive rate (A)........................ 5.51% 5.06% 5.61% 5.89%
Pay rate................................ 6.23% 6.23% 6.23% 6.23%
Total weighted average rates on swaps:
Receive rate............................ 6.68% 6.46% 6.73% 6.87%
Pay rate................................ 5.84% 5.64% 5.91% 6.06%
Interest rate caps
Notional amount (in thousands).......... $ 25,000 $ 25,000 $ 25,000 $ 150,000 $ 300,000
Total notional value of swaps and caps (in
thousands)............................... $ 25,000 $ 25,000 $ 25,000 $ 450,000 $ 300,000
</TABLE>

F-27
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(13) FINANCIAL INSTRUMENTS (CONTINUED)
- --------------

(A) The weighted average floating rates were derived from the forward rates
implied in the forward United States Treasury yield curve. The actual
variable rates in the agreements are based on the three month LIBOR.

(14) FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS 107, "Disclosures about Fair Values of Financial Instruments," requires
disclosure 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 policyowners'
equity, although such volatility will 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 presentation on the following page 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:

Cash, short-term investments, policy loans, accrued investment income:
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

F-28
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(14) FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
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.

Mortgage loans on real estate: 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, 1995, 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, are in foreclosure, are 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
(principally, annuities) are stated at the cost the Company would incur
to extinguish the liability; i.e., the cash surrender value.

Long-term debt: fair values for long-term debt 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.

The estimated fair values of the Company's significant financial instruments
at December 31, 1995 and 1994, are as follows:

<TABLE>
<CAPTION>
1995 1994
---------------------------- ----------------------------
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......................... $ 3,142,096 $ 3,142,096 $ 2,566,768 $ 2,566,768
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Equity securities...................... $ 109,675 $ 109,675 $ 178,770 $ 178,770
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Short-term investments................. $ 39,353 $ 39,353 $ 8,529 $ 8,529
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Mortgage loans on real estate............ $ 353,597 $ 369,706 $ 447,663 $ 431,812
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Interest rate caps....................... $ 6,445 $ 4,110 $ 3,648 $ 3,626
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Financial liabilities--policy reserves for
annuities................................. $ 1,524,801 $ 1,493,847 $ 1,575,131 $ 1,543,129
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Long-term debt............................. $ 36,461 $ 36,461 $ 34,292 $ 34,292
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Unrecognized financial instruments--
interest rate swaps:
Net receivable position................ $ -- $ 11,887 $ -- $ --
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net payable position................... $ -- $ (3,392) $ -- $ (1,819)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>

F-29
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(15) UNAUDITED PRO FORMA ADJUSTMENT FOR THE CAPITAL CONTRIBUTION

The Company plans to make the Capital Contribution of certain assets and
liabilities having a net book value of $79.0 million prior to the Subscription
Offering as follows (dollars in thousands):

<TABLE>
<CAPTION>
PRO FORMA PRO FORMA SEPTEMBER 30,
AS ADJUSTED ADJUSTMENT FOR 1996
FOR THE THE CAPITAL ----------------
CAPITAL CONTRIBUTION
CONTRIBUTION -------------- (UNAUDITED)
-------------- (UNAUDITED)
(UNAUDITED)
<S> <C> <C> <C>
Fixed maturity securities...................................... $ 2,294,031 $ (3,540) $ 2,297,571
-------------- -------------- ----------------
-------------- -------------- ----------------
Equity securities.............................................. $ 73,897 $ (678) $ 74,575
-------------- -------------- ----------------
-------------- -------------- ----------------
Mortgage loans on real estate.................................. $ 250,484 $ (9,749) $ 260,233
-------------- -------------- ----------------
-------------- -------------- ----------------
Real estate.................................................... $ 5,875 $ (34,137) $ 40,012
-------------- -------------- ----------------
-------------- -------------- ----------------
Property, Plant and Equipment.................................. $ 4,600 $ (8,724) $ 13,324
-------------- -------------- ----------------
-------------- -------------- ----------------
Checks drawn in excess of bank balances........................ $ 39,283 $ (30,972) $ 8,311
-------------- -------------- ----------------
-------------- -------------- ----------------
Long-term debt................................................. $ 36,255 $ 8,800 $ 45,055
-------------- -------------- ----------------
-------------- -------------- ----------------
Policyowners' surplus.......................................... $ 413,926 $ 79,000 $ 492,926
-------------- -------------- ----------------
-------------- -------------- ----------------
</TABLE>

Earnings per share have been computed on a pro forma basis by giving
retroactive effect to the issuance of 14.5 million shares of Class A common
stock and 5 million shares of Class B common stock as if all such shares had
been issued at the beginning of the respective periods and by giving retroactive
effect to the Capital Contribution, which has the effect of reducing net income
by $0.1 million and $0.3 million for the nine months ended September 30, 1996
and the year ended December 31, 1995, respectively.

F-30
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO ITS DATE.
----------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information.............................. 2
Prospectus Summary................................. 4
Risk Factors....................................... 15
The Company........................................ 20
The Reorganization and Distribution of the Non-Life
Insurance Subsidiaries............................ 20
The Subscription Offering.......................... 25
The Public Offering................................ 28
The Preferred Offering............................. 28
Use of Proceeds.................................... 29
Market for Common Stock............................ 29
Dividend Policy.................................... 30
Capitalization..................................... 31
Selected Consolidated Financial and Operating
Data.............................................. 32
Unaudited Pro Forma Condensed Consolidated
Financial Statements.............................. 35
Management's Discussion and Analysis of Results of
Operations and Financial Condition................ 43
Business........................................... 60
Supervision and Regulation......................... 83
Management......................................... 86
Management Compensation............................ 89
Certain Transactions and Relationships............. 97
Ownership of Common Stock.......................... 103
Description of the Capital Stock................... 104
Certain Provisions of the Articles of Incorporation
and Bylaws of the Company......................... 107
Shares Eligible for Future Sale.................... 109
Plan of Distribution............................... 110
Legal Matters...................................... 111
Experts............................................ 111
Glossary of Certain Insurance and Other Defined
Terms............................................. 112
Index to Financial Statements...................... F-1
</TABLE>

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

THROUGH AND INCLUDING , 1996 (THE 25TH DAY AFTER THE DATE OF
THIS PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON
STOCK, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION
OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT
TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

5,000,000 SHARES

AMERUS LIFE HOLDINGS, INC.

CLASS A COMMON STOCK
(NO PAR VALUE)

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

PROSPECTUS

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

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The expenses payable by the Company in connection with the sale of the Class
A Common Stock offered hereby are set forth below. All such amounts (other than
the SEC registration fee, the NASD filing fee and Nasdaq National Market fee)
are estimated. Amounts shown reflect one-half of the total offering expenses of
$2,075,000. The Selling Shareholder has agreed to pay for one-half of the total
offering expenses.

<TABLE>
<CAPTION>
AMOUNT
-------------
<S> <C>
SEC registration fee........................................................... $ 19,828
NASD filing fee................................................................ 6,000
Nasdaq National Market entry fee............................................... 25,000
Printing and engraving expenses................................................ 187,500
Legal fees and expenses........................................................ 212,500
Accounting fees and expenses................................................... 125,000
Blue Sky fees and expenses (including legal fees and expenses)................. 7,500
Iowa Insurance Commissioner Financial Advisor.................................. 425,000
Subscription Agent fees and expenses........................................... 12,500
Miscellaneous.................................................................. 16,672
-------------
Total........................................................................ $ 1,037,500
-------------
-------------
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Sections 851 and 856 of the Iowa Business Corporation Act ("IBCA") provide
that a corporation has the power to indemnify its directors and officers against
liabilities and expenses incurred by reason of such person serving in the
capacity of director or officer, if such person has acted in good faith and in a
manner reasonably believed by the individual to be in or not opposed to the best
interests of the corporation, and in any criminal proceeding if such person had
no reasonable cause to believe the individual's conduct was unlawful. The
foregoing indemnity provisions notwithstanding, in the case of actions brought
by or in the right of the corporation, no indemnification shall be made to such
director or officer with respect to any matter as to which such individual has
been adjudged to be liable to the corporation unless, and only to the extent
that, a court determines that indemnification is proper under the circumstances.

The Company maintains a directors' and officers' liability insurance policy
to insure against losses arising from claims made against its directors and
officers, subject to the limitations and conditions as set forth in the
policies. In adition, the Company has entered into indemnification agreements
with its directors and certain of its executive officers providing for the
indemnification of such persons as permitted by the Company's Articles of
Incorporation and Iowa law.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

On August 1, 1996, the Company issued 10,000 shares of Class A Common Stock
to AmerUs Group. Subsequently, on November , 1996, the Company issued
shares of Class A

II-1
<PAGE>

Common Stock and 5,000,000 shares of Class B Common Stock to AmerUs Group. See
"The Reorganization and Distribution of the Non-Life Insurance Subsidiaries."
The issuance of the foregoing was made in reliance upon exemptions from the
registration provisions of the Securities Act set forth in Section 3(a)(11) and
Section 4(2) thereof (including the rules and regulations promulgated
thereunder) relative to, respectively, intrastate sales by an issuer and sales
not involving a public offering. No underwriters were involved in the initial
issuance of shares described in this paragraph.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS:

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------ -----------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Subscription Agency Agreement
1.2 Subscription Agency Agreement, dated November, 1996, among the Company, AmerUs Group Co. and The
Chicago Corporation
2.1 Plan of Reorganization dated October 27, 1995
3.1 Articles of Incorporation of the Company
3.2 Bylaws of the Company
3.3 Proposed Amended and Restated Articles of Incorporation of the Company
3.4 Amended and Restated Articles of Incorporation of the Company (as adopted November 1, 1996)
4.1 Form of Certificate for shares of Class A Common Stock
5.1 Opinion of James A. Smallenberger, Esq.
10.1 Form of Intercompany Agreement dated as of November 1, 1996, among American Mutual Holding Company,
AmerUs Group Co. and the Company
10.2 Joint Venture Agreement, dated as of March 8, 1996, between American Mutual Insurance Company and
Ameritas Life Insurance Corp., and First Amendment thereto dated as of April 1, 1996 between
American Mutual Insurance Company and Ameritas Life Insurance Corp.
10.3 Management and Administrative Service Agreement, dated as of April 1, 1996, among American Mutual
Life Insurance Company, Ameritas Variable Life Insurance Company and Ameritas Life Insurance Corp.
10.4 Agreement and Plan of Merger, dated as of August 24, 1994, among Central Life Assurance Company and
American Mutual Life Insurance Company
10.5 Line of Credit Application and Approval, dated February 28, 1996 and April 22, 1996, respectively,
between American Mutual Life Insurance Company and Federal Home Loan Bank of Des Moines
10.6 All*AmerUs Supplemental Executive Retirement Plan, effective January 1, 1996
10.7 American Mutual Life Insurance Company Supplemental Pension Plan (which was curtailed as of December
31, 1995)
10.8 P Central Life Assurance Company Supplemental Pension Plan (which was curtailed as of December 31,
1995)
10.9 P Management Incentive Plan
10.10P AmerUs Life Insurance Company Performance Share Plan
10.11 AmerUs Life Stock Incentive Plan
10.12 Employment Agreement, dated February 1, 1995, between American Mutual Life Insurance Company and Sam
C. Kalainov
10.13 AmerUs Life Non-Employee Director Stock Plan
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------ -----------------------------------------------------------------------------------------------------
<C> <S>
10.14 Modification of Real Estate Contract, dated as of July 1, 1996, between AmerUs Life Insurance Company
and AmerUs Properties, Inc.
10.15 Asset Management and Disposition Agreement, dated January 3, 1995, between American Mutual Life
Insurance Company and Central Properties, Inc. (now AmerUs Properties, Inc.)
10.16 Management Contract, dated January 1, 1993, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc.)
10.17 Management Contract, dated November 1, 1994, between American Mutual Life Insurance Company and CPI
Resource Group (now AmerUs Group Co.)
10.18 Management Contract, dated January 1, 1993, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc. )
10.19 Management Contract, dated January 1, 1995, between American Mutual Life Insurance Company and
Central Properties, Inc. (now AmerUs Properties, Inc.)
10.20 Management Contract, dated July 1, 1994, between Central Life Assurance Company and CPI Resource
Group (now AmerUs Group Co.)
10.21P Management Contract, dated February 1, 1994, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc.)
10.22 Management Contract, dated May 1, 1994, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc. )
10.23 Management Contract, dated February 1, 1994, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc. )
10.24 Management Contract, dated January 4, 1994, between Central Life Assurance Company and CPI Resource
Group (now AmerUs Group Co.)
10.25 Management Contract, dated November 1, 1994, between American Mutual Life Insurance Company and CPI
Resource Group (now AmerUs Group Co.)
10.26 Lease - Business Property, dated December 1, 1995, between American Mutual Life Insurance Company and
AmerUs Leasing
10.27 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Bank
10.28 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Bank
10.29 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Bank
10.30 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Group
10.31 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Group
10.32P Assumption and Amendment of Lease Agreement, dated as of November 27, 1993 among Central Life
Assurance Company, Midland Savings Bank FSB (now AmerUs Bank) and Midland Financial Mortgages, Inc.
(now AmerUs Mortgage, Inc.)
10.33 Form of Indemnification Agreement executed with directors and certain officers
10.34P Amended and Restated Agreement and Certificate of Limited Partnership of CPI Housing Partners I,
L.P., dated as of September 1, 1995, among AmerUs Properties, Inc., American Mutual Life Insurance
Company and American Mutual Affordable Housing Partners, L.P.
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------ -----------------------------------------------------------------------------------------------------
<C> <S>
10.35 Amended and Restated Agreement of Limited Partnership of American Mutual Affordable Housing Partners,
L.P., dated as of September 1, 1995, among GrA Partners Joint Venture, AmerUs Properties, Inc.,
American Mutual Life Insurance Company, NCC Polar Company and NCC Orion Company
10.36P Amended and Restated Agreement and Certificate of Limited Partnership of 65th & Vista, L.P., dated as
of September 1, 1995, among AmerUs Properties, Inc., American Mutual Life Insurance Company and
American Mutual Affordable Housing Partners, L.P.
10.37P Amended and Restated Agreement and Certificate of Limited Partnership of 60th & Vista, L.P., dated as
of September 1, 1995, among I.R.F.B. Joint Venture, American Mutual Life Insurance Company and
American Mutual Affordable Housing Partners, L.P.
10.38P Certificate of Limited Partnership and Limited Partnership Agreement of CPI Housing Partners II,
L.P., dated March 27, 1995, between Central Properties, Inc. (now AmerUs Properties, Inc.) and
American Mutual Life Insurance Company
10.39P Amended and Restated Agreement and Certificate of Limited Partnership of API Housing Partners III,
L.P., dated as of March 1, 1996, among AmerUs Properties, Inc., American Mutual Life Insurance
Company, American Mutual Affordable Housing Partners II, L.P. and AmerUs Management, Inc.
10.40P Certificate of Limited Partnership and Limited Partnership Agreement of API Housing Partners IV,
L.P., dated as of June 1995, between AmerUs Properties, Inc. and American Mutual Life Insurance
Company
10.41P Amended and Restated Agreement and Certificate of Limited Partnership of API Housing Partners V,
L.P., dated as of March 1, 1996, among AmerUs Properties, Inc., American Mutual Life Insurance
Company, American Mutual Affordable Housing Partners II, L.P. and AmerUs Management, Inc.
10.42P Amended and Restated Agreement and Certificate of Limited Partnership of API-Chimney Ridge Partners,
L.P., dated as of March 1, 1996, among AmerUs Properties, Inc., American Mutual Life Insurance
Company, American Mutual Affordable Housing Partners II, L.P. and AmerUs Management, Inc.
10.43 Certificate of Limited Partnership and Limited Partnership Agreement of API Housing Partners VI,
L.P., dated as of October 10, 1995, between AmerUs Properties, Inc. and American Mutual Life
Insurance Company
10.44P Certificate of Limited Partnership and Limited Partnership Agreement of 86th & Meredith Associates,
L.P., dated as of February 14, 1995, between Central Properties, Inc. (now AmerUs Properties, Inc.)
and American Mutual Life Insurance Company
10.45 Certificate of Limited Partnership and Limited Partnership Agreement of Altoona Meadows Investors,
L.P., dated as of February 22, 1995, between KPI Investments, Inc. and Dennis Galeazzi
10.46 First Amendment to the Certificate of Limited Partnership and Limited Partnership Agreement of
Altoona Meadows Investors, L.P., dated as of September 28, 1995, between KPI Investments, Inc. and
American Mutual Life Insurance Company
10.47 Loan Servicing Agreement, dated August 1, 1990, between Central Life Assurance Company and Midland
Financial Mortgages, Inc. (now AmerUs Mortgage), filed as Exhibit 10.30 to Central Resource Group,
Inc.'s Registration Statement on Form S-1, Registration No. 33-48359, filed on June 4, 1992
10.48 Construction Loan Servicing Agreement, dated November 20, 1995, between American Mutual Life
Insurance Company and AmerUs Properties, Inc.
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------ -----------------------------------------------------------------------------------------------------
<C> <S>
10.49P Servicing Agreement, dated March 1996, between American Mutual Life Insurance Company and AmerUs
Properties, Inc.
10.50 Loan Servicing Agreement, dated September 1, 1994, between Central Life Assurance Company and Midland
Savings Bank, FSB (now AmerUs Bank)
10.51 Miscellaneous Services Agreement, dated as of January 1, 1996, among American Mutual Life Insurance
Company, AmerUs Group Co., AmerUs Bank, AmerUs Mortgage, Inc., Iowa Realty Company, Inc., Midland
Homes, Inc., Iowa Title Company, AmerUs Insurance, Inc., and AmerUs Finance Inc.
10.52 Amendment to Service Agreement, dated as of May 1, 1996, between American Mutual Life Insurance
Company and AmerUs Bank
10.53 Data Processing Service Agreement, dated November 1, 1989, between Central Life Assurance Company and
Midland Financial Savings and Loan Association (now AmerUs Bank), filed as Exhibit 10.29 to Central
Resource Group, Inc.'s Registration Statement on Form S-1, Registration No. 33-48359, filed on June
4, 1992
10.54 First Amendment to Data Processing Service Agreement, dated as of September 30, 1990, between Central
Life Assurance Company and Midland Savings Bank FSB (now AmerUs Bank)
10.55 Second Amendment to Data Processing Service Agreement, dated as of May 1, 1991, between Central Life
Assurance Company and Midland Savings Bank FSB (now AmerUs Bank)
10.56 Third Amendment to Data Processing Service Agreement, dated as of October 1, 1991, between Central
Life Assurance Company and Midland Savings Bank, FSB (now AmerUs Bank)
10.57 Fourth Amendment to Data Processing Service Agreement, dated as of January 2, 1992, between Central
Life Assurance Company and Midland Savings Bank, FSB (now AmerUs Bank)
10.58 Fifth Amendment to Data Processing Service Agreement, dated as of July 1, 1993, between Central Life
Assurance Company and Midland Savings Bank FSB (now AmerUs Bank)
10.59 Sixth Amendment to Data Processing Service Agreement, dated as of September 1, 1995, between American
Mutual Insurance Company and AmerUs Bank
10.60 Seventh Amendment to Data Processing Service Agreement, dated as of January 1, 1996, between American
Mutual Life Insurance Company and AmerUs Bank
10.61P Data Processing Support Services Agreement, dated as of July 1, 1993, between Central Life Assurance
Company and Midland Savings Bank, FSB (now AmerUs Bank)
10.62 Miscellaneous Services Agreement, dated as of February 5, 1992, between Central Life Assurance
Company and Midland Savings Bank FSB (now AmerUs Bank)
10.63 Investment Management Agreement, dated as of August 15, 1992, between Central Life Assurance Company
and Midland Savings Bank FSB (now AmerUs Bank)
10.64 Disbursement Services Agreement, dated as of April 15, 1995, between American Mutual Life Insurance
Company and Midland Savings Bank FSB (now AmerUs Bank)
10.65 Purchase Agreement, dated as of June 28, 1996, between AmerUs Life Insurance Company and AmerUs Bank
10.66 Brokerage Contract dated January 1, 1995, among American Mutual Life Insurance Company and Midland
Investment Services, Inc. (now AmerUs Investments, Inc.)
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------ -----------------------------------------------------------------------------------------------------
<C> <S>
10.67 Servicing Agreement, dated March 1, 1992, between Central Life Assurance Company and Midland
Investment Services, Inc. (now AmerUs Investments, Inc.)
10.68 Tax Allocation Agreement dated as of November 4, 1996
10.69P Amended and Restated Articles of Limited Partnership of T.L.B. Limited Partnership, undated, among F.
Barry Tapp, Lartnec Investment Co., Michael H. Taylor, Michael Longley and Michael A. Hammond, along
with a Memorandum of Understanding Regarding Assignments of Partnership Interests dated December 21,
1988 and three corresponding Assignments of Partnership Interest dated December 6, 1988 wherein
Central Life Assurance Company is Assignee, and an Assignment of Partnership Interest of T.L.B.
Limited Partnership dated December 29, 1995, between Lartnec Investment Co. and AmerUs Properties,
Inc.
10.70 Assignment of Partnership Interest of T.L.B. Limited Partnership, dated December 28, 1994, between
Lartnec Investment Co. and Central Properties, Inc. (now AmerUs Properties, Inc.) and Assignment of
Limited Partnership Interest of T.L.B. Limited Partnership, dated December 30, 1995, between
American Mutual Life Insurance Company and AmerUs Properties, Inc.
10.71P Limited Partnership Agreement of South 19th Limited Partnership, dated December 30, 1985, among
Lartnec Investment Co., F. Barry Tapp and Michael H. Taylor, along with a Memorandum of
Understanding Regarding Assignments of Partnership Interests dated December 21, 1988 and three
corresponding Assignments of Partnership Interest dated December 6, 1988 wherein Central Life
Assurance Company is Assignee, and an Assignment of Partnership Interest of South 19th Limited
Partnership dated December 29, 1995, between Lartnec Investment Co. and AmerUs Properties, Inc.
10.72 Assignment of Partnership Interest of South 19th Limited Partnership, dated December 28, 1994,
between Lartnec Investment Co. and Central Properties, Inc. (now AmerUs Properties, Inc.) and
Assignment of Partnership Interest of South 19th Limited Partnership, dated December 30, 1995,
between American Mutual Life Insurance Company and AmerUs Properties, Inc.
10.73P Limited Partnership Agreement of Theater Project Limited Partnership dated March 15, 1985, among Tapp
Management, Inc., Tapp Development Co., Ltd., Michael Longley, Michael A. Hammond and Gary L. Wood
along with an Amendment to Certificate of Limited Partnership, dated August 22, 1986, and an
Assignment of Limited Partnership Interest, dated November 15, 1992, between F. Barry Tapp and Tapp
Development Co., Ltd., and an Amended Certificate of Limited Partnership dated December 24, 1992
10.74 Assignment of Limited Partnership Interest of Theater Project Limited Partnership, dated December 30,
1995, between American Mutual Life Insurance Company and AmerUs Properties, Inc.
10.75P Certificate of Limited Partnership and Limited Partnership Agreement of Lagos Vista Limited
Partnership, dated August 10, 1994, between Central Properties, Inc. (now AmerUs Properties, Inc.)
and Central Life Assurance Company
10.76P Joint Venture Agreement, dated July 30, 1980, between F. Barry Tapp and Lartnec Investment Co., along
with an Assignment by F. Barry Tapp of Interest in Tapp & LICO Properties, dated December 24, 1981,
between F. Barry Tapp and Tapp Development Co., Ltd., an Assignment of Partnership Interest, dated
December 6, 1988, between Tapp Development Co., Ltd. and Central Life Assurance Company and an
Assignment of Joint Venture Interest of Tapp and LICO Properties, dated December 29, 1995, between
Lartnec Investment Co. and AmerUs Properties, Inc.
</TABLE>

II-6
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------ -----------------------------------------------------------------------------------------------------
<C> <S>
10.77 Assignment of Joint Venture Interest of Tapp and LICO Properties, dated December 28, 1994, between
Lartnec Investment Co. and Central Properties, Inc. (now AmerUs Properties, Inc.) and Assignment of
Joint Venture Interest of Tapp and LICO Properties, dated December 30, 1995, between American Mutual
Life Insurance Company and AmerUs Properties, Inc.
10.78P Joint Venture Agreement, dated December 30, 1980, between MBT, Ltd. and Lartnec Investment Co., along
with an Assignment by F. Barry Tapp of Interest in MBT, Ltd., dated December 24, 1981, between F.
Barry Tapp and Tapp Development Co., Ltd., an Assignment by Michael H. Taylor of Interest in MBT,
Ltd., dated December 23, 1981, between Michael H. Taylor and Tapp Development Co., Ltd., an
Assignment of Limited Partnership Interest, dated December 6, 1988, between Tapp Development Co.,
Ltd. and Central Life Assurance Company, and an Assignment of Joint Venture Interest of Round Rock
Outlet, Ltd., dated December 29, 1995, between Lartnec Investment Co. and AmerUs Properties, Inc.
10.79 Assignment of Joint Venture Interest of Round Rock Outlet, Ltd., dated December 28, 1994, between
Lartnec Investment Co. and Central Properties, Inc. (now AmerUs Properties, Inc.) and Assignment of
Joint Venture Interest of Round Rock Outlet, Ltd., dated December 30, 1995, between American Mutual
Life Insurance Company and AmerUs Properties, Inc.
*10.80 Revolving Credit and Term Loan Agreement, dated November 1996, between the Company and Chase
Manhattan Bank, Note issued by the Company and Borrower's Pledge Agreement
11.1 Computation of Pro Forma Earnings Per Share
21.1 List of Subsidiaries
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of James A. Smallenberger (to be included in Exhibit 5.1)
23.3 Consent of Tillinghast, a Towers Perrin Company
24.1 Powers of Attorney
27.1 Financial Data Schedule
99.1 Form of Subscription Order Form for Subscription Policyowners in the Subscription Offering
99.2 Form of Question and Answer Supplement to be delivered to Subscription Policyowners in the
Subscription Offering
99.3 Opinion of Tillinghast, a Towers Perrin Company, dated October 26, 1995, regarding the establishment
and operation of the Closed Block
</TABLE>

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

* To be filed by amendment.

(b)FINANCIAL STATEMENT SCHEDULES:

Report of Independent Auditors on Schedules
Schedule I -- Summary of Investments (Other than Investments in Related
Parties)
Schedule III -- Supplementary Insurance Information
Schedule IV -- Reinsurance
Schedule V -- Valuation and Qualifying Accounts

All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.

II-7
<PAGE>
ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to provisions described in Item 14 above, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that: (1) for purposes of
determining any liability under the Securities Act, the information omitted from
the form of prospectus filed as part of a registration statement in reliance
upon Rule 430A and contained in the form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was declared
effective; and (2) for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

In the event the Public Offering is completed, the undersigned hereby
undertakes to provide to the underwriters at the closing specified in the
underwriting agreement, certificates in such denominations and registered in
such names as required by the underwriters to permit prompt delivery to each
purchaser.

II-8
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Des Moines,
Iowa on November 7, 1996.

AMERUS LIFE HOLDINGS, INC.

By: /s/ ROGER K. BROOKS

--------------------------------------
Roger K. Brooks
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER

Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed on November 7, 1996 by the
following persons in the capacities indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE(S)
- ------------------------------------------------------ ---------------------------------------------------------

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

/s/ MICHAEL E. SPROULE
------------------------------------------- Executive Vice President and Chief Financial Officer
Michael E. Sproule (principal financial officer)

/s/ MICHAEL G. FRAIZER
------------------------------------------- Senior Vice President and Controller/Treasurer (principal
Michael G. Fraizer accounting officer)

*
------------------------------------------- Director
John R. Albers

*
------------------------------------------- Director
Malcolm Candlish
</TABLE>

II-9
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE TITLE(S)
- ------------------------------------------------------ ---------------------------------------------------------

<C> <S>
*
------------------------------------------- Director
D T Doan

*
------------------------------------------- Director
Thomas F. Gaffney

*
------------------------------------------- Director
Sam C. Kalainov

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

------------------------------------------- Director
Jack C. Pester

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

* By: /s/ JAMES A. SMALLENBERGER
-------------------------------------------
James A. Smallenberger
(ATTORNEY IN FACT)
</TABLE>

II-10
<PAGE>
AMERUS LIFE HOLDINGS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
SCHEDULE PAGE
- --------- ---------

<C> <S> <C>
Report of Independent Auditors on Schedules

I Summary of Investments -- Other than Investments in Related Parties............................ II-13

III Supplementary Insurance Information............................................................ II-14

IV Reinsurance.................................................................................... II-15

V Valuation and Qualifying Accounts.............................................................. II-16
</TABLE>

All other schedules are omitted for the reason that they are not required, are
not applicable or that the equivalent information has been included in the
consolidated financial statements, and notes thereto, or elsewhere herein.

II-11
<PAGE>
WHEN THE TRANSACTION REFERRED TO IN NOTE 1 OF NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS HAS BEEN CONSUMMATED, WE WILL BE ABLE TO RENDER THE
FOLLOWING REPORT.

KPMG PEAT MARWICK LLP

REPORT OF INDEPENDENT AUDITORS ON SCHEDULES

The Board of Directors
AmerUs Life Holdings, Inc.:

Under date of July 1, 1996, except as to note 1 which is as of November , 1996
we reported on the consolidated balance sheets of AmerUs Life Holdings, Inc. and
subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of income, policyowners' equity, and cash flows for each of the years
in the three-year period ended December 31, 1995, which are included in the
prospectus.

As reported in note 1 to the consolidated financial statements, the Company
implemented the provisions of the Statement of Financial Accounting Standards
(SFAS) No. 120, "Accounting and Reporting by Mutual Life Insurance Enterprises
and by Insurance Enterprises for Certain Long-Duration Participating Contracts,"
and in 1993 the Company implemented the provisions of SFAS 106, "Employers
Accounting for Postretirement Benefits Other Than Pensions," and SFAS 115,
"Accounting for Certain Investments in Debt and Equity Securities." Also, as
discussed in note 1 to the consolidated financial statements, the Company has
restated its consolidated financial statements to reflect the spin-off of a
wholly owned subsidiary, which resulted in a change in the subsidiaries
comprising the consolidated financial statements.

In connection with our audits of the aforementioned consolidated financial
statements, we also have audited the related consolidated financial statement
schedules in the registration statement. 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.

Des Moines, Iowa
July 1, 1996, except as to
note 1, which is as of
November , 1996

II-12
<PAGE>
AMERUS LIFE HOLDINGS, INC.
SCHEDULE I
SUMMARY OF INVESTMENTS

<TABLE>
<CAPTION>
AMOUNT AT WHICH
AMORTIZED SHOWN IN THE
TYPE OF INVESTMENT COST MARKET VALUE BALANCE SHEET
- ------------------------------------------------------------------ ------------- ------------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C>
December 31, 1995
Fixed Maturities:
Bonds
United States Government and government agencies and
authorities.................................................. $ 719,454 $ 753,953 $ 753,953
States, municipalities and political subdivisions............. 1,550 1,686 1,686
Foreign governments........................................... 20,149 22,416 22,416
Public utilities.............................................. 382,637 417,625 417,625
Convertibles and bonds with warrants attached................. 53,909 57,504 57,504
All other corporate bonds..................................... 1,773,550 1,888,913 1,888,913
------------- ------------- ---------------
Total fixed maturities...................................... 2,951,249 3,142,096 3,142,096
------------- ------------- ---------------
Equity securities:
Common stocks
Public utilities.............................................. 2,216 11,254 11,254
Banks, trust and insurance companies.......................... 18,742 27,845 27,845
Industrial, miscellaneous and all other....................... 6,029 41,935 41,935
Nonredeemable preferred stocks.................................. 25,882 28,641 28,641
------------- ------------- ---------------
Total equity securities..................................... 52,869 109,675 109,675
------------- ------------- ---------------
Mortgage loans on real estate..................................... 353,597 353,597
Real estate....................................................... 52,199 52,199
Policy loans...................................................... 220,044 220,044
Other long-term investments....................................... 48,064 48,064
Short-term investments............................................ 39,353 39,353
------------- ---------------
Total investments........................................... $ 3,717,376 $ 3,965,028
------------- ---------------
------------- ---------------
</TABLE>

II-13
<PAGE>
AMERUS LIFE HOLDINGS, INC.
SCHEDULE III
SUPPLEMENTARY INSURANCE INFORMATION
<TABLE>
<CAPTION>
FUTURE POLICY
BENEFITS, BENEFITS,
DEFERRED LOSSES, OTHER POLICY CLAIMS,
POLICY CLAIMS AND CLAIMS AND NET LOSSES AND
ACQUISITION LOSS UNEARNED BENEFITS PREMIUM INVESTMENT SETTLEMENT
SEGMENT COST EXPENSES (1) PREMIUMS PAYABLE (2) REVENUE INCOME EXPENSES
- ------------------------ ----------- ------------- ----------- ------------ ----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
LIFE INSURANCE
12/31/95 $ 267,711 $ 3,621,537 $ 0 $ 16,617 $ 244,087 $ 285,244 $ 424,034
12/31/94 $ 404,361 $ 3,487,034 $ 0 $ 9,803 $ 237,912 $ 275,691 $ 414,935
12/31/93 $ 226,360 $ 269,854 $ 409,792

AMORTIZATION
OF DEFERRED
POLICY OTHER
ACQUISITION OPERATING PREMIUMS
SEGMENT COSTS EXPENSES WRITTEN
- ------------------------ ------------- ----------- ---------------

<S> <C> <C> <C>
LIFE INSURANCE
12/31/95 $ 50,239 $ 58,655 n/a
12/31/94 $ 42,756 $ 68,604 n/a
12/31/93 $ 47,441 $ 58,637 n/a
</TABLE>

- --------------
(1) Includes policy reserves, policyholder funds, and dividends payable
(2) Policy and contract claims

II-14
<PAGE>
AMERUS LIFE HOLDINGS, INC.
SCHEDULE IV
REINSURANCE

<TABLE>
<CAPTION>
PERCENTAGE
CEDED TO ASSUMED FROM OF AMOUNT
OTHER OTHER ASSUMED TO
GROSS AMOUNT COMPANIES COMPANIES NET AMOUNT NET
-------------- ------------- ------------- -------------- ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995
Life insurance in force........... $ 29,640,037 $ 2,916,812 $ 56,226 $ 26,779,451 0.21%
Premiums
Life insurance premiums and
charges........................ $ 310,543 $ 14,186 $ 4,862 $ 301,219 1.61%
Accident and health insurance... 2,595 2,361 4 268 1.68%
-------------- ------------- ------------- -------------- ------------
Total premiums.................. $ 313,138 $ 16,547 $ 4,866 $ 301,457 1.61%
-------------- ------------- ------------- -------------- ------------
Year ended December 31, 1994
Life insurance in force........... $ 31,514,751 $ 3,265,105 $ 2,590,847 $ 30,840,493 8.40%
Premiums
Life insurance premiums and
charges........................ $ 299,769 $ 13,740 $ 7,857 $ 293,886 2.67%
Accident and health insurance... 3,024 2,697 61 388 15.72%
-------------- ------------- ------------- -------------- ------------
Total premiums.................. $ 302,793 $ 16,437 $ 7,918 $ 294,274 2.69%
-------------- ------------- ------------- -------------- ------------
Year ended December 31, 1993
Life insurance in force........... $ 33,152,140 $ 3,370,347 $ 4,689,689 $ 34,471,482 13.60%
Premiums
Life insurance premiums and
charges........................ $ 290,162 $ 15,292 $ 8,478 $ 283,348 2.99%
Accident and health insurance... 3,183 2,843 145 485 29.90%
-------------- ------------- ------------- -------------- ------------
Total premiums.................. $ 293,345 $ 18,135 $ 8,623 $ 283,833 3.04%
-------------- ------------- ------------- -------------- ------------
</TABLE>

II-15
<PAGE>
AMERUS LIFE HOLDINGS, INC.
SCHEDULE V
VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
ADDITIONS
--------------------------------------------- DEDUCTIONS --
BALANCE AT CHARGED TO PROVISION ON
BEGINNING OF COSTS AND CHARGED TO MORTGAGES SOLD/ BALANCE AT
DESCRIPTION PERIOD EXPENSES OTHER ACCOUNTS TRANSFERRED END OF PERIOD
- -------------------- ------------- -------------------- ----------------------- ----------------- -------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Mortgage Loans
1995.............. $ 65,549 $ 622 $ -- $ (36,104) $ 30,067
1994.............. $ 80,220 $ 1,207 $ -- $ (15,878) $ 65,549
1993.............. $ 81,040 $ 2,976 $ -- $ (3,796) $ 80,220
</TABLE>

II-16
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Subscription Agency Agreement
1.2 Subscription Agency Agreement, dated November, 1996, among the Company, AmerUs Group Co. and the
Chicago Corporation
2.1 Plan of Reorganization dated October 27, 1995
3.1 Articles of Incorporation of the Company
3.2 Bylaws of the Company
3.3 Proposed Amended and Restated Articles of Incorporation of the Company
3.4 Amended and Restated Articles of Incorporation of the Company (as adopted November 1, 1996)
4.1 Form of Certificate for shares of Class A Common Stock
5.1 Opinion of James A. Smallenberger, Esq.
10.1 Form of Intercompany Agreement dated as of November 1, 1996, among American Mutual Holding Company,
AmerUs Group Co. and the Company
10.2 Joint Venture Agreement, dated as of March 8, 1996, between American Mutual Insurance Company and
Ameritas Life Insurance Corp., and First Amendment thereto dated as of April 1, 1996 between American
Mutual Insurance Company and Ameritas Life Insurance Corp.
10.3 Management and Administrative Service Agreement, dated as of April 1, 1996, among American Mutual
Life Insurance Company, Ameritas Variable Life Insurance Company and Ameritas Life Insurance Corp.
10.4 Agreement and Plan of Merger, dated as of August 24, 1994, among Central Life Assurance Company and
American Mutual Life Insurance Company
10.5 Line of Credit Application and Approval, dated February 28, 1996 and April 22, 1996, respectively,
between American Mutual Life Insurance Company and Federal Home Loan Bank of Des Moines
10.6 All*AmerUs Supplemental Executive Retirement Plan, effective January 1, 1996
10.7 American Mutual Life Insurance Company Supplemental Pension Plan (which was curtailed as of December
31, 1995)
10.8 P Central Life Assurance Company Supplemental Pension Plan (which was curtailed as of December 31,
1995)
10.9 P Management Incentive Plan
10.10P AmerUs Life Insurance Company Performance Share Plan
10.11 AmerUs Life Stock Incentive Plan
10.12 Employment Agreement, dated February 1, 1995, between American Mutual Life Insurance Company and Sam
C. Kalainov
10.13 AmerUs Life Non-Employee Director Stock Plan
10.14 Modification of Real Estate Contract, dated as of July 1, 1996, between AmerUs Life Insurance Company
and AmerUs Properties, Inc.
10.15 Asset Management and Disposition Agreement, dated January 3, 1995, between American Mutual Life
Insurance Company and Central Properties, Inc. (now AmerUs Properties, Inc.)
10.16 Management Contract, dated January 1, 1993, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc.)
10.17 Management Contract, dated November 1, 1994, between American Mutual Life Insurance Company and CPI
Resource Group (now AmerUs Group Co.)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
10.18 Management Contract, dated January 1, 1993, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc. )
<C> <S>
10.19 Management Contract, dated January 1, 1995, between American Mutual Life Insurance Company and
Central Properties, Inc. (now AmerUs Properties, Inc.)
10.20 Management Contract, dated July 1, 1994, between Central Life Assurance Company and CPI Resource
Group (now AmerUs Group Co.)
10.21P Management Contract, dated February 1, 1994, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc.)
10.22 Management Contract, dated May 1, 1994, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc. )
10.23 Management Contract, dated February 1, 1994, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc. )
10.24 Management Contract, dated January 4, 1994, between Central Life Assurance Company and CPI Resource
Group (now AmerUs Group Co.)
10.25 Management Contract, dated November 1, 1994, between American Mutual Life Insurance Company and CPI
Resource Group (now AmerUs Group Co.)
10.26 Lease - Business Property, dated December 1, 1995, between American Mutual Life Insurance Company and
AmerUs Leasing
10.27 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Bank
10.28 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Bank
10.29 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Bank
10.30 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Group
10.31 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Group
10.32P Assumption and Amendment of Lease Agreement, dated as of November 27, 1993 among Central Life
Assurance Company, Midland Savings Bank FSB (now AmerUs Bank) and Midland Financial Mortgages, Inc.
(now AmerUs Mortgage, Inc.)
10.33 Form of Indemnification Agreement executed with directors and certain officers
10.34P Amended and Restated Agreement and Certificate of Limited Partnership of CPI Housing Partners I,
L.P., dated as of September 1, 1995, among AmerUs Properties, Inc., American Mutual Life Insurance
Company and American Mutual Affordable Housing Partners, L.P.
10.35 Amended and Restated Agreement of Limited Partnership of American Mutual Affordable Housing Partners,
L.P., dated as of September 1, 1995, among GrA Partners Joint Venture, AmerUs Properties, Inc.,
American Mutual Life Insurance Company, NCC Polar Company and NCC Orion Company
10.36P Amended and Restated Agreement and Certificate of Limited Partnership of 65th & Vista, L.P., dated as
of September 1, 1995, among AmerUs Properties, Inc., American Mutual Life Insurance Company and
American Mutual Affordable Housing Partners, L.P.
10.37P Amended and Restated Agreement and Certificate of Limited Partnership of 60th & Vista, L.P., dated as
of September 1, 1995, among I.R.F.B. Joint Venture, American Mutual Life Insurance Company and
American Mutual Affordable Housing Partners, L.P.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
10.38P Certificate of Limited Partnership and Limited Partnership Agreement of CPI Housing Partners II,
L.P., dated March 27, 1995, between Central Properties, Inc. (now AmerUs Properties, Inc.) and
American Mutual Life Insurance Company
<C> <S>
10.39P Amended and Restated Agreement and Certificate of Limited Partnership of API Housing Partners III,
L.P., dated as of March 1, 1996, among AmerUs Properties, Inc., American Mutual Life Insurance
Company, American Mutual Affordable Housing Partners II, L.P. and AmerUs Management, Inc.
10.40P Certificate of Limited Partnership and Limited Partnership Agreement of API Housing Partners IV,
L.P., dated as of June 1995, between AmerUs Properties, Inc. and American Mutual Life Insurance
Company
10.41P Amended and Restated Agreement and Certificate of Limited Partnership of API Housing Partners V,
L.P., dated as of March 1, 1996, among AmerUs Properties, Inc., American Mutual Life Insurance
Company, American Mutual Affordable Housing Partners II, L.P. and AmerUs Management, Inc.
10.42P Amended and Restated Agreement and Certificate of Limited Partnership of API-Chimney Ridge Partners,
L.P., dated as of March 1, 1996, among AmerUs Properties, Inc., American Mutual Life Insurance
Company, American Mutual Affordable Housing Partners II, L.P. and AmerUs Management, Inc.
10.43 Certificate of Limited Partnership and Limited Partnership Agreement of API Housing Partners VI,
L.P., dated as of October 10, 1995, between AmerUs Properties, Inc. and American Mutual Life
Insurance Company
10.44P Certificate of Limited Partnership and Limited Partnership Agreement of 86th & Meredith Associates,
L.P., dated as of February 14, 1995, between Central Properties, Inc. (now AmerUs Properties, Inc.)
and American Mutual Life Insurance Company
10.45 Certificate of Limited Partnership and Limited Partnership Agreement of Altoona Meadows Investors,
L.P., dated as of February 22, 1995, between KPI Investments, Inc. and Dennis Galeazzi
10.46 First Amendment to the Certificate of Limited Partnership and Limited Partnership Agreement of
Altoona Meadows Investors, L.P., dated as of September 28, 1995, between KPI Investments, Inc. and
American Mutual Life Insurance Company
10.47 Loan Servicing Agreement, dated August 1, 1990, between Central Life Assurance Company and Midland
Financial Mortgages, Inc. (now AmerUs Mortgage), filed as Exhibit 10.30 to Central Resource Group,
Inc.'s Registration Statement on Form S-1, Registration No. 33-48359, filed on June 4, 1992
10.48 Construction Loan Servicing Agreement, dated November 20, 1995, between American Mutual Life
Insurance Company and AmerUs Properties, Inc.
10.49P Servicing Agreement, dated March 1996, between American Mutual Life Insurance Company and AmerUs
Properties, Inc.
10.50 Loan Servicing Agreement, dated September 1, 1994, between Central Life Assurance Company and Midland
Savings Bank, FSB (now AmerUs Bank)
10.51 Miscellaneous Services Agreement, dated as of January 1, 1996, among American Mutual Life Insurance
Company, AmerUs Group Co., AmerUs Bank, AmerUs Mortgage, Inc., Iowa Realty Company, Inc., Midland
Homes, Inc., Iowa Title Company, AmerUs Insurance, Inc., and AmerUs Finance Inc.
10.52 Amendment to Service Agreement, dated as of May 1, 1996, between American Mutual Life Insurance
Company and AmerUs Bank
10.53 Data Processing Service Agreement, dated November 1, 1989, between Central Life Assurance Company and
Midland Financial Savings and Loan Association (now AmerUs Bank), filed as Exhibit 10.29 to Central
Resource Group, Inc.'s Registration Statement on Form S-1, Registration No. 33-48359, filed on June
4, 1992
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
10.54 First Amendment to Data Processing Service Agreement, dated as of September 30, 1990, between Central
Life Assurance Company and Midland Savings Bank FSB (now AmerUs Bank)
<C> <S>
10.55 Second Amendment to Data Processing Service Agreement, dated as of May 1, 1991, between Central Life
Assurance Company and Midland Savings Bank FSB (now AmerUs Bank)
10.56 Third Amendment to Data Processing Service Agreement, dated as of October 1, 1991, between Central
Life Assurance Company and Midland Savings Bank, FSB (now AmerUs Bank)
10.57 Fourth Amendment to Data Processing Service Agreement, dated as of January 2, 1992, between Central
Life Assurance Company and Midland Savings Bank, FSB (now AmerUs Bank)
10.58 Fifth Amendment to Data Processing Service Agreement, dated as of July 1, 1993, between Central Life
Assurance Company and Midland Savings Bank FSB (now AmerUs Bank)
10.59 Sixth Amendment to Data Processing Service Agreement, dated as of September 1, 1995, between American
Mutual Insurance Company and AmerUs Bank
10.60 Seventh Amendment to Data Processing Service Agreement, dated as of January 1, 1996, between American
Mutual Life Insurance Company and AmerUs Bank
10.61P Data Processing Support Services Agreement, dated as of July 1, 1993, between Central Life Assurance
Company and Midland Savings Bank, FSB (now AmerUs Bank)
10.62 Miscellaneous Services Agreement, dated as of February 5, 1992, between Central Life Assurance
Company and Midland Savings Bank FSB (now AmerUs Bank)
10.63 Investment Management Agreement, dated as of August 15, 1992, between Central Life Assurance Company
and Midland Savings Bank FSB (now AmerUs Bank)
10.64 Disbursement Services Agreement, dated as of April 15, 1995, between American Mutual Life Insurance
Company and Midland Savings Bank FSB (now AmerUs Bank)
10.65 Purchase Agreement, dated as of June 28, 1996, between AmerUs Life Insurance Company and AmerUs Bank
10.66 Brokerage Contract dated January 1, 1995, among American Mutual Life Insurance Company and Midland
Investment Services, Inc. (now AmerUs Investments, Inc.)
10.67 Servicing Agreement, dated March 1, 1992, between Central Life Assurance Company and Midland
Investment Services, Inc. (now AmerUs Investments, Inc.)
10.68 Tax Allocation Agreement dated , 1996
10.69P Amended and Restated Articles of Limited Partnership of T.L.B. Limited Partnership, undated, among F.
Barry Tapp, Lartnec Investment Co., Michael H. Taylor, Michael Longley and Michael A. Hammond, along
with a Memorandum of Understanding Regarding Assignments of Partnership Interests dated December 21,
1988 and three corresponding Assignments of Partnership Interest dated December 6, 1988 wherein
Central Life Assurance Company is Assignee, and an Assignment of Partnership Interest of T.L.B.
Limited Partnership dated December 29, 1995, between Lartnec Investment Co. and AmerUs Properties,
Inc.
10.70 Assignment of Partnership Interest of T.L.B. Limited Partnership, dated December 28, 1994, between
Lartnec Investment Co. and Central Properties, Inc. (now AmerUs Properties, Inc.) and Assignment of
Limited Partnership Interest of T.L.B. Limited Partnership, dated December 30, 1995, between American
Mutual Life Insurance Company and AmerUs Properties, Inc.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
10.71P Limited Partnership Agreement of South 19th Limited Partnership, dated December 30, 1985, among
Lartnec Investment Co., F. Barry Tapp and Michael H. Taylor, along with a Memorandum of Understanding
Regarding Assignments of Partnership Interests dated December 21, 1988 and three corresponding
Assignments of Partnership Interest dated December 6, 1988 wherein Central Life Assurance Company is
Assignee, and an Assignment of Partnership Interest of South 19th Limited Partnership dated December
29, 1995, between Lartnec Investment Co. and AmerUs Properties, Inc.
<C> <S>
10.72 Assignment of Partnership Interest of South 19th Limited Partnership, dated December 28, 1994,
between Lartnec Investment Co. and Central Properties, Inc. (now AmerUs Properties, Inc.) and
Assignment of Partnership Interest of South 19th Limited Partnership, dated December 30, 1995,
between American Mutual Life Insurance Company and AmerUs Properties, Inc.
10.73P Limited Partnership Agreement of Theater Project Limited Partnership dated March 15, 1985, among Tapp
Management, Inc., Tapp Development Co., Ltd., Michael Longley, Michael A. Hammond and Gary L. Wood
along with an Amendment to Certificate of Limited Partnership, dated August 22, 1986, and an
Assignment of Limited Partnership Interest, dated November 15, 1992, between F. Barry Tapp and Tapp
Development Co., Ltd., and an Amended Certificate of Limited Partnership dated December 24, 1992
10.74 Assignment of Limited Partnership Interest of Theater Project Limited Partnership, dated December 30,
1995, between American Mutual Life Insurance Company and AmerUs Properties, Inc.
10.75P Certificate of Limited Partnership and Limited Partnership Agreement of Lagos Vista Limited
Partnership, dated August 10, 1994, between Central Properties, Inc. (now AmerUs Properties, Inc.)
and Central Life Assurance Company
10.76P Joint Venture Agreement, dated July 30, 1980, between F. Barry Tapp and Lartnec Investment Co., along
with an Assignment by F. Barry Tapp of Interest in Tapp & LICO Properties, dated December 24, 1981,
between F. Barry Tapp and Tapp Development Co., Ltd., an Assignment of Partnership Interest, dated
December 6, 1988, between Tapp Development Co., Ltd. and Central Life Assurance Company and an
Assignment of Joint Venture Interest of Tapp and LICO Properties, dated December 29, 1995, between
Lartnec Investment Co. and AmerUs Properties, Inc.
10.77 Assignment of Joint Venture Interest of Tapp and LICO Properties, dated December 28, 1994, between
Lartnec Investment Co. and Central Properties, Inc. (now AmerUs Properties, Inc.) and Assignment of
Joint Venture Interest of Tapp and LICO Properties, dated December 30, 1995, between American Mutual
Life Insurance Company and AmerUs Properties, Inc.
10.78P Joint Venture Agreement, dated December 30, 1980, between MBT, Ltd. and Lartnec Investment Co., along
with an Assignment by F. Barry Tapp of Interest in MBT, Ltd., dated December 24, 1981, between F.
Barry Tapp and Tapp Development Co., Ltd., an Assignment by Michael H. Taylor of Interest in MBT,
Ltd., dated December 23, 1981, between Michael H. Taylor and Tapp Development Co., Ltd., an
Assignment of Limited Partnership Interest, dated December 6, 1988, between Tapp Development Co.,
Ltd. and Central Life Assurance Company, and an Assignment of Joint Venture Interest of Round Rock
Outlet, Ltd., dated December 29, 1995, between Lartnec Investment Co. and AmerUs Properties, Inc.
10.79 Assignment of Joint Venture Interest of Round Rock Outlet, Ltd., dated December 28, 1994, between
Lartnec Investment Co. and Central Properties, Inc. (now AmerUs Properties, Inc.) and Assignment of
Joint Venture Interest of Round Rock Outlet, Ltd., dated December 30, 1995, between American Mutual
Life Insurance Company and AmerUs Properties, Inc.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
*10.80 Revolving Credit and Term Loan Agreement, dated November 1996, between the Company and Chase
Manhattan Bank, Note issued by the Company and Borrower's Pledge Agreement
<C> <S>
11.1 Computation of Pro Forma Earnings Per Share
21.1 List of Subsidiaries
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of James A. Smallenberger (to be included in Exhibit 5.1)
23.3 Consent of Tillinghast, a Towers Perrin Company
24.1 Powers of Attorney
27.1 Financial Data Schedule
99.1 Form of Subscription Order Form for Subscription Policyowners in the Subscription Offering
99.2 Form of Question and Answer Supplement to be delivered to Subscription Policyowners in the
Subscription Offering
99.3 Opinion of Tillinghast, a Towers Perrin Company, dated October 26, 1995, regarding the establishment
and operation of the Closed Block
</TABLE>

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

* To be filed by amendment.

<PAGE>

5,000,000 Shares

AmerUs Life Holdings, Inc.
Class A Common Stock
(no par value)

SUBSCRIPTION AGENCY AGREEMENT

______________, 1996

The Chicago Corporation
208 South LaSalle Street
Chicago, Illinois 60604

Gentlemen:

SECTION 1. INTRODUCTION. AmerUs Life Holdings, Inc., an Iowa
corporation, (the "Company"), and AmerUs Group Co., an Iowa Corporation (the
"Selling Shareholder" and, together with the Company, the "Offerors") are
offering to certain policyowners of AmerUs Life Insurance Company, an Iowa
corporation, ("AmerUs Life") nontransferable rights to subscribe for up to
5,000,000 shares of the Class A Common Stock, no par value of the Company (the
"Class A Common Stock") pursuant to a subscription offering (the "Subscription
Offering") contemplated by a plan of reorganization approved by the Iowa
Commissioner of Insurance (the "Iowa Insurance Commissioner"). One-half of the
shares of Class A Common Stock being offered in the Subscription Offering are
being sold by the Company, and the other half are being sold by the Selling
Shareholder. The Company has a total of 125,000,000 shares of authorized common
stock divided into two classes consisting of 75,000,000 shares of Class A Common
Stock, no par value (the "Class A Common Stock"), and 50,000,000 shares of Class
B Common Stock, no par value (the "Class B Common Stock"). The price per share
of Class A Common Stock being offered in the Subscription Offering has been
fixed at $_____ (the "Subscription Price"), subject to adjustment as hereinafter
provided.

It is acknowledged that the purchase of shares of Class A Common Stock
in the Subscription Offering for each subscriber is subject to a maximum
purchase limitation of 5,000 shares and a minimum purchase limitation of 100
shares. It is currently the intention of the Offerors to offer all or a portion
of the Class A Common Stock not subscribed for in the Subscription Offering to
the public in a public offering (the "Public Offering"). If the price in the
public offering (the "Public Offering Price") is less than

<PAGE>

the Subscription Price, then the Offerors shall issue refunds to subscribing
policyowners equal to the amount of such difference multiplied by the number of
shares subscribed for. In the event that the Offerors determine that the
closing of the Subscription Offering shall occur without a subsequent Public
Offering and provided that the Offerors elect to proceed with the Subscription
Offering, a bona fide determination will be made by the Offerors after
consultation with their financial advisors of the price per share at which the
Class A Common Stock would trade in the public market on the closing of the
Subscription Offering (the "Revised Subscription Price"). If the Revised
Subscription Price is less than the Subscription Price, then the Offerors will
issue refunds to subscribing policyowners equal to the amount of such difference
multiplied by the number of shares subscribed for.

The Offerors have heretofore prepared and delivered to the Agent (as
hereinafter defined) copies of the final Prospectus dated ____________, 1996
included as part of the Registration Statement (as such term is defined in
Section 5(c)) when it was declared effective by the SEC (the "Prospectus"),
except that if the Prospectus filed by the Offerors pursuant to Rule 424(b) of
the rules and regulations of the SEC under the Securities Act of 1933 (the
"Act") and the rules and regulations of the SEC thereunder (the "SEC Rules and
Regulations") differs from the Prospectus on file at the time the Registration
Statement initially became effective, the term "Prospectus" shall refer to the
prospectus filed pursuant to Rule 424(b) from and after the time said prospectus
is filed with or mailed to the SEC for filing. The Prospectus contains, among
other things, information with respect to the Company and the Class A Common
Stock.

The Offerors desire to retain The Chicago Corporation (the "Agent") to
act as the Offerors' exclusive subscription agent in connection with the
Subscription Offering. The Offerors hereby confirm their agreements contained
herein with the Agent with respect to the appointment of the Agent as their
agent to assist in the sale of the Class A Common Stock in the Subscription
Offering.

SECTION 2. APPOINTMENT OF THE AGENT. Subject to the terms and
conditions of this Agreement, the Offerors hereby appoint the Agent, as their
exclusive subscription agent, to consult with and advise the Offerors in
connection with the Subscription Offering, and to solicit subscriptions for
shares of Class A Common Stock in the Subscription Offering. On the basis of
the representations, warranties and agreements herein contained, the Agent
accepts such appointment and agrees to assist the Offerors in the
Subscription Offering through selling Class A Common Stock on a "best
efforts" basis through the Agent's distribution system and potentially
through other NASD (as such term is hereinafter defined) registered
broker/dealers; provided, however, that the Agent shall not be responsible
for obtaining subscriptions for any specific number of shares of Class A
Common Stock and shall not be

2
<PAGE>

obligated to take any action which is inconsistent with any applicable laws,
rules, regulations, decisions or orders. Subscriptions will be offered by means
of Stock Order Forms. The appointment of the Agent hereunder shall terminate
upon the termination of the Subscription Offering.

The Offerors hereby agree and acknowledge that the Agent may utilize,
if deemed appropriate by the Agent, other broker/dealers which are members of
the National Association of Securities Dealers, Inc. (the "NASD"). The Agent
hereby agrees that prior to utilizing other broker/dealers, the Agent will
consult with the Offerors regarding its determination and will not take any
action in this regard which is not approved in writing by the Offerors.

The Offerors hereby further agree and acknowledge that, having
appointed the Agent hereunder, only personnel employed by the Agent, and such
other personnel as are assigned for specific purposes or services contemplated
by this Agreement to be performed by the Agent, will be involved in providing
the services described herein.

All subscription funds received by the Agent or by other
broker/dealers soliciting subscriptions (if any) shall be promptly
transmitted (either by U.S. Mail or similar type of transmittal) to the
Offerors' escrow and transfer agent by noon of the following business day.

SECTION 3. FEES. In addition to the expenses specified in Sections 7
and 8 hereof, as compensation for the Agent's services under this Agreement, the
Offerors will pay the following fees or expenses to the Agent:

(a) A fee of one percent of the total aggregate proceeds of the
Subscription Offering shall be paid to the Agent for the first $10,000,000 of
aggregate proceeds of the Subscription Offering and a fee of one half of one
percent shall be paid for aggregate proceeds of the Subscription Offering in
excess of $10,000,000 (if any); provided, however, that the Agent's minimum
compensations for services rendered hereunder shall be $25,000.

(b) As stated above, the Agent may use other selected broker/dealers
to assist in the subscription or purchase of the shares. Any fees payable to
such persons or broker/dealers shall be paid by the Agent out of the fees
received by the Agent pursuant to subparagraph (a). The decision to use
selected broker/dealers shall be made by the Agent in consultation with the
Offerors.

(c) Reimbursement for reasonable out-of-pocket expenses (including
expenses related to attorneys' fees and expenses), provided that the retention
of outside counsel has previously been approved by the Offerors.

3
<PAGE>

SECTION 4. CLOSING. In the event that the Subscription Offering is
not consummated for any reason, including but not limited to the inability to
sell the Class A Common Stock during the Subscription and Public Offering
(including any permitted extension thereof), this Agreement shall terminate and
any persons who have subscribed for any of the shares of Class A Common Stock
shall have refunded to them the full amount which has been received from such
person, together with interest, if any, as provided in the Prospectus relating
to the Subscription Offering. In the event of an over-subscription of the
Subscription Offering, the Offerors shall allocate the shares to subscribers in
accordance with the terms of the Subscription Offering. The Offerors hereby
agree that the Agent shall be held harmless from any liability arising out of
any allocation of shares of Class A Common Stock. A closing shall be held at
such place as shall be agreed upon between the Offerors and the Agent, as of the
close of business on a business day to be selected by the Offerors and
contemporaneous with the closing of the Public Offering or at such other time as
shall be agreed upon between the Offerors and the Agent. The Offerors shall
notify the Agent by telephone, confirmed in writing, when funds shall have been
received for all shares of the Class A Common Stock purchased in the
Subscription Offering. At the closing, the Offerors shall deliver to the Agent
in next day funds the fees and expenses due and owing to the Agent as set forth
in Sections 3, 7 and 8 hereof, any certificates required hereby and other
documents deemed reasonably necessary by the Agent shall be executed and
delivered to effect the sale of the Class A Common Stock as contemplated hereby
and pursuant to the terms of the Prospectus. The hour and date upon which the
Offerors shall release for delivery all shares of Class A Common Stock, in
accordance with the terms hereof, are referred to herein as the "Closing Date."

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE OFFERORS. The
Company and the Selling Shareholder, each severally on behalf of and as to
itself, represents and warrants to, and agrees with, the Agent that:

(a) This Agreement has been duly authorized, executed and delivered
by each of the Company and the Selling Shareholder and is a valid and binding
agreement and obligation of each of the Company and the Selling Shareholder
except as (i) rights to indemnity and contribution hereunder may be limited by
federal or state securities laws or the public policy underlying such laws; (ii)
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the
enforcement of creditors' rights generally or by general equity principles,
regardless of whether such enforceability is considered in a proceeding in
equity or at law; and (iii) the remedy of specific enforcement and injunctive
and other forms of equitable relief may be subject to certain equitable defenses
and to the discretion of the court before which any proceeding therefor may be
brought.

<PAGE>

(b) As of the Closing Date, each of the Company and the Selling
Shareholder will have satisfied the conditions precedent to its consummation of
the Subscription Offering in all material respects in accordance with the
Subscription Offering, all applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions precedent to the
Subscription Offering imposed upon it by the Iowa Insurance Commissioner. The
Iowa Insurance Commissioner has approved the Offerors' application for the
Subscription Offering and the Public Offering, and such approval remains in full
force and effect.

(c) A Registration Statement on Form S-1 (Registration No. 333-12239)
with respect to the Subscription Offering has been prepared by the Offerors, has
been filed with the SEC and has been declared effective by the SEC. Such
Registration Statement, including any documents incorporated by reference
therein and all financial schedules and exhibits thereto, as amended, including
post-effective amendments, is herein called the "Registration Statement." At
the time the Registration Statement became effective, and at all times
subsequent thereto up to the Closing Date, the Registration Statement and the
Prospectus, including any amendments or supplements thereto, conformed and will
conform as to form in all material respects to the requirements of the
Securities Act of 1933, as amended (the "Act") and the SEC Rules and
Regulations, and neither the Registration Statement nor the Prospectus,
including any amendment or supplement thereto, contained or will contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided,
however, that none of the representations and warranties in this subsection
shall apply to statements in or omissions from any preliminary Prospectus, the
Prospectus, the Registration Statement or any supplement made in reliance upon
and in conformity with information furnished to the Offerors in writing by the
Agent expressly for use therein. All material contracts, agreements and other
documents described or referred to in the Prospectus to which each of the
Company and the Selling Shareholder is a party, or by which it or its properties
are bound or committed are, unless otherwise disclosed therein, to the knowledge
of each of the Company and the Selling Shareholder, in full force and effect;
the descriptions thereof or references thereto are correct in all material
respects; and no material default exists in the due performance or observance of
any material obligations, agreements or other document so described or referred
to therein, unless otherwise disclosed therein.

(d) Neither the SEC, nor any court or other governmental agency or
body has, by order or otherwise, prevented or suspended the use of the
Prospectus or the offer or sale of the shares of Class A Common Stock, or, to
the best knowledge of each of the Company and the Selling Shareholder, is any
such action threatened.

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<PAGE>

(e) KPMG Peat Marwick LLP, which has expressed its opinion with
respect to certain of the financial statements and schedules filed as part of
the Prospectus and included in the Registration Statement, has, with respect to
the Offerors, informed the same that it is an independent certified public
accountant within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants and the published rules and
regulations of the SEC.

(f) The financial statements and schedule(s) of the Company and notes
related thereto included in the Prospectus present fairly the consolidated
financial condition of the Company as of the dates indicated and the results of
operations for the periods specified and comply as to form in all material
respects with the applicable accounting requirements. Such financial statements
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis during the periods involved. The tables and any
other financial and numerical data in the Prospectus fairly present in all
material respects the information purported to be shown thereby at the
respective dates thereof and for the respective periods covered thereby and were
prepared on a basis consistent with the audited financial statements of the
Company.

(g) Since the respective dates as of which information is given in
the Prospectus, except as may otherwise be stated therein, (i) there has not
been any material adverse change in the condition, financial or otherwise, of
the Company or in the results of operations, earnings, or business affairs of
the Company, whether or not arising from transactions in the ordinary course of
business or (ii) there have not been any material transactions entered into by
the Company other than those in the ordinary course of business. Neither the
Company nor AmerUs Life has any material liability of any kind, contingent or
otherwise, except as set forth in the Prospectus.

(h) Each of the Company and the Selling Shareholder is duly
incorporated and validly existing as a corporation in good standing under the
laws of the State of Iowa, with full corporate power and authority to own its
properties and conduct its business as described in the Prospectus; AmerUs Life
is duly incorporated and validly existing as a stock life insurance company in
good standing under the laws of Iowa, with full corporate power and authority to
own its properties and conduct its business as described in the Prospectus; the
Company and AmerUs Life have obtained all material licenses, permits and other
governmental authorizations currently required for the conduct of their
respective businesses, except where the failure to do so would not have a
material adverse effect on the businesses, results of operations or general
business affairs of the Company or AmerUs Life; all such material licenses,
permits and other governmental authorizations are in full force and effect, and
the Company and

6
<PAGE>

AmerUs Life are in all material respects complying therewith. Neither the
Company nor AmerUs Life is required to qualify as a foreign corporation in any
jurisdiction in which the failure to qualify would have a material adverse
impact on the conduct of the Company's or AmerUs Life's business, as described
in the Prospectus.

(i) The shares of Class A Common Stock offered in the Subscription
Offering have been duly and validly authorized for issuance and, with respect to
such shares held by the Selling Shareholder, have been duly issued and delivered
to the Selling Shareholder, and, when issued and delivered by the Company or
when delivered by the Selling Shareholder, as the case may be, against payment
of the consideration described herein, will be duly and validly issued and fully
paid and nonassessable; and the Class A Common Stock conforms in all material
respects to the description thereof contained in the Prospectus. Except as
provided in the Prospectus, there are no preemptive rights or other rights to
subscribe or to purchase, or, except as set forth in the Prospectus, Articles of
Incorporation and Bylaws of the Company, any restriction upon the voting or
transfer of, any shares of Common Stock pursuant to the Company's Articles of
Incorporation, Bylaws or other governing documents or any agreement or other
instrument to which each of the Company and the Selling Shareholder is a party
or by which it may be bound. Neither the filing of the Registration Statement
nor the offering or sale of the Class A Common Stock as contemplated by this
Agreement gives rise to any rights, other than those which have been waived or
satisfied, for or relating to the registration of any shares of Class A Common
Stock. Upon the issuance of the Class A Common Stock, good title to the Class A
Common Stock will be transferred from each of the Company and the Selling
Shareholder, as the case may be to the purchasers thereof against payment
thereof subject to such claims as may be asserted against the purchasers thereof
by third party claimants.

(j) The Company owns, directly or indirectly, all of the issued and
outstanding capital stock of AmerUs Life, the only direct subsidiary of the
Company, free and clear of any lien, charge or encumbrance and there are no
outstanding warrants, rights or options to acquire or instruments convertible
into, or exchangeable for any shares of capital stock or other equity interest
in AmerUs Life.

(k) Neither the Company or AmerUs Life nor the Selling Shareholder is
in violation of or in default, and no event has occurred which with notice of
lapse of time, or both, would constitute default on the part of the Company or
AmerUs Life or the Selling Shareholder in the performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
lease, loan agreement, mortgage, note, indenture or other material instrument to
which it is a party or by which it or

7
<PAGE>

its assets are bound, which default in any individual case or in the aggregate
would have a material adverse effect on the business, general business affairs,
operations or financial condition of the Company and AmerUs Life, on a
consolidated basis, or the Selling Shareholder, as the case may be, and the
execution and delivery of this Agreement, the incurrence of the obligations
herein set forth and the consummation of the transactions herein contemplated
will not conflict with or constitute a breach of, or default under, or result in
the creation of any material lien, charge or encumbrance upon any of the assets
of the Company or AmerUs Life or of the Selling Shareholder, as the case may be,
pursuant to the Articles of Incorporation or Bylaws of the Company or AmerUs
Life or of the Selling Shareholder, as the case may be, or any material
obligation, agreement, contract, franchise, license, lease, indenture, note,
mortgage, loan agreement or other material instrument to which any of them is a
party or in which any of them has a beneficial interest in, or by which any of
them may be bound, or materially violate or conflict with any law,
administrative regulation or administrative or court decree. No consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the execution
and delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement, except such as has been obtained and except for
approval of the Iowa Insurance Commissioner and the SEC, compliance with the
Act, the state securities laws ("Blue Sky Laws") applicable to the offering of
the Class A Common Stock and the clearance of such offering with the NASD and
the National Association of Securities Dealers Automated Quotation System
("NASDAQ").

(l) Each of the Company and AmerUs Life and the Selling Shareholder
have good and marketable title to all their properties and assets material to
their respective businesses and to those properties and assets described in the
Prospectus as owned by each of them, free and clear of all liens, charges,
encumbrances or restrictions, except such as are described in the Prospectus or
are individually or in the aggregate are not materially significant or important
in relation to the business of the Company and AmerUs Life or the Selling
Shareholder, as the case may be; and all of the leases and subleases material to
the business of each of the Company and AmerUs Life, including those described
in the Prospectus, are, to the knowledge of each of the Company and the Selling
Shareholder, valid and binding leases and subleases in full force and effect.

(m) Each of the Company and AmerUs Life and the Selling Shareholder
are neither subject to nor in material violation of any directive from the Iowa
Insurance Commissioner, or to the knowledge of each of the Company and the
Selling Shareholder any other governmental authority, to make any material
change in the method of conducting their respective businesses or affairs; each
of the Company and AmerUs Life and the Selling Shareholder have

8
<PAGE>

conducted and are conducting their respective businesses to comply in all
material respects with all applicable statutes and regulations (including,
without limitation, all regulations, decisions, directives and orders of the
Iowa Insurance Commissioner) and, except as set forth in the Prospectus, there
is, to the knowledge of each of the Company and the Selling Shareholder, no
charge, investigation, action, suit or proceeding before or by any court,
regulatory authority or governmental agency or body pending or threatened which
may materially and adversely affect the performance of this Agreement or the
consummation of the transactions herein contemplated or which may result in any
material adverse change in the condition (financial or otherwise), business or
operations of each of the Company and the Selling Shareholder, or which would
materially and adversely affect any of its properties and assets.

(n) Each of the Company and the Selling Shareholder has complied or
will comply in all material respects with each and every undertaking or
commitment made by it under the Blue Sky Laws, including, without limitation,
each and every undertaking or commitment made in connection with the
Subscription Offering.

SECTION 6. AGREEMENTS OF THE OFFERORS. The Company and the Selling
Shareholder, each severally on behalf of and as to itself, hereby agrees with
the Agent that:

(a) Each of the Company and the Selling Shareholder will use its best
efforts to cause the Registration Statement to be declared effective by the SEC
and the Subscription Offering to be approved by the Iowa Insurance Commissioner.
The Offerors will promptly notify you: (i) of any request by or the receipt of
any comments from the SEC with respect to the transactions contemplated by this
Agreement; (ii) of any request by or any comments or other communications
received from the SEC, and any request by the SEC for any amendment or
supplement to the Registration Statement or the Prospectus, or for additional
information with respect to the transactions contemplated therein; and (iii) of
the issuance by the SEC or any court or governmental agency or body of any stop
order or other order suspending or enjoining the effectiveness or approval of
the Registration Statement, the Prospectus or of the institution of any
proceedings for that purpose or of any notification of the suspension of
qualification of the Class A Common Stock in any jurisdiction or the initiation
or threatening of any proceeding for that purpose or the threat of any such
action. Each of the Company and the Selling Shareholder will make every
reasonable effort to prevent the issuance by the SEC and any court or
governmental agency or body of any stop order or other such order, or request
for amendment or additional information or the commencement of any proceeding
and, if any such order, request or proceeding shall at any time be issued or
commenced, to obtain the lifting thereof, to respond thereto or to obtain the
termination thereof at the earliest possible moment.

9
<PAGE>

(b) The Offerors will deliver to you, without charge, from time to
time such number of copies of the Prospectus and related documents (as amended
or supplemented), as you may reasonably request. The Offerors authorize the
Agent, subject to all requirements of applicable law, to use the Prospectus (as
the same may be amended or supplemented) in connection with the sale of the
Class A Common Stock in the Subscription Offering.

(c) The Offerors have delivered to you one complete copy (including
exhibits) of their Registration Statement on Form S-1 as originally filed with
the SEC and of each amendment thereto.

(d) During such period as may be required by applicable law, the
Offerors will comply, so far as they are able and at their own expense, with all
requirements imposed upon them by the SEC and by the Act, the Exchange Act and
the SEC Rules and Regulations, in each case as from time to time in effect, so
far as necessary to permit the continuance of offers, sales or dealings in
shares of Class A Common Stock during such period in accordance with the
provisions hereof and the Prospectus.

(e) If, at any time during the period when the Prospectus is
required by law to be delivered, any event occurs as a result of which, in
the reasonable opinion of counsel to the Offerors or the Agent's counsel, the
Prospectus, including any amendments or supplements, would contain an untrue
statement of a material fact, or would omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or
if it is necessary in the reasonable opinion of counsel to the Offerors or
the Agent's counsel at any time to amend or supplement the Prospectus,
including any amendments or supplements to comply in all material respects
with the Act and all other applicable laws, the Offerors will promptly advise
you thereof and will promptly prepare and file with the SEC and any other
authority with jurisdiction an amendment or supplement (in form and substance
satisfactory to your counsel) which will correct such statement or omission
or effect such compliance; the Offerors will not file any amendment or
supplement to the Registration Statement or to the Prospectus which is
material to the Agent or its counsel without first furnishing a copy to the
Agent and its counsel prior to such filing.

(f) Neither the Company nor AmerUs Life will, prior to the Closing
Date, incur any material liability or obligation, direct or contingent, or enter
into any material transaction, other than in the ordinary course of business,
except as disclosed or contemplated in the Prospectus.

(g) During the period of three years after the date of the
Prospectus, the Offerors will furnish to you upon request (i)

10
<PAGE>

as soon as practicable after the end of each fiscal year, the annual report of
the Company containing the balance sheet of the Company as of the close of such
fiscal year and corresponding statements of income, stockholders' equity and
changes in financial position for the year then ended, such financial statements
to be certified by independent public accountants; (ii) as soon as practicable
after the end of each fiscal quarter (other than the last quarter of each fiscal
year), an unaudited consolidated balance sheet and statements of consolidated
income, stockholders' equity and changes in financial position of the Company
and its consolidated subsidiaries as at the end of and for such quarter; (iii)
as soon as practicable after mailing to shareholders, a copy of each proxy
statement, financial statement and periodic and special reports of the Company
mailed to holders of any class of its securities registered under Section 12 of
the Exchange Act; and (iv) as soon as practicable after the filing thereof, of
each non-confidential report or other statement or document filed by the Company
with the SEC, or with any national securities exchange or quotation system on
which any securities of the Company may be listed or quoted;

(h) The Offerors shall promptly prepare and file with the SEC, from
time to time, such reports as may be required to be filed by the SEC Rules and
Regulations, including, without limitation, reports with respect to the sale of
the Class A Common Stock and the application of the proceeds thereof as may be
required in accordance with Rule 463 under the Act.

(i) The Company shall use the net proceeds from the sale of the Class
A Common Stock in the Subscription Offering in the manner set forth in the
Prospectus under the caption "Use of Proceeds."

(j) The Offerors will promptly take all steps necessary to register
its Class A Common Stock under Section 12(g) of the Exchange Act.

(k) The Offerors will qualify the Class A Common Stock under the Blue
Sky Laws of such jurisdictions as the Agent and the Offerors mutually agree
(subject to practicality in terms of cost and to the qualification that the
Offerors shall not be obligated to file any general consent to service of
process or to qualify to do business in any jurisdiction in which it is not so
qualified). The Offerors will make such applications, file such consents to
service of process or other documents and furnish such other information as may
be reasonably requested for that purpose and to comply with such laws so as to
permit the continuance of sales and dealings in such jurisdictions for as long a
period as the Agent may reasonably request. The Offerors will notify the Agent
immediately of, and confirm in writing, the suspension of qualification of the
Class A Common Stock or the threat of such action in any jurisdiction. In each
jurisdiction where any of the

11
<PAGE>

Class A Common Stock shall have been qualified as provided above, the Offerors
will make and file such statements and reports as are required by, or in the
future may be required by, the laws of such jurisdiction, provided that Agent's
counsel so notifies the Offerors in writing of such requirement.

SECTION 7. PAYMENT OF EXPENSES OF THE OFFERORS. Whether or not the
transactions contemplated hereunder are consummated or this Agreement becomes
effective or is terminated for any reason, the Offerors will pay all costs and
expenses incident to the performance of their obligations hereunder, including,
without limiting the generality of the foregoing:

(a) All fees and expenses of the accountants and counsel of the
Offerors, all costs and expenses incurred in connection with the preparation,
printing, filing and distribution, including costs of shipping and mailing, of
the Registration Statement and the Prospectus and all amendments and supplements
thereto and other documents in connection with the transactions contemplated by
this Agreement and the Prospectus (including all exhibits and financial
statements) and all agreements and supplements provided for therein and in this
Agreement.

(b) All registration fees and expenses, including without limitation
reasonable legal fees and disbursements of the Agent's or Offerors' counsel
incurred in connection with qualifying or registering all or any part of the
Class A Common Stock for offer and sale under the Blue Sky Laws.

(c) All fees and expenses of the escrow and transfer agent and any
special agents appointed for the transfer of the Class A Common Stock,
preparation, printing, issuance and delivery of the certificates representing
shares of the Class A Common Stock, all stock issue and transfer taxes, if any,
with respect to the sale and delivery of the Class A Common Stock, and all fees
of the NASD.

SECTION 8. REIMBURSEMENT OF AGENT'S EXPENSES. The Offerors shall
reimburse the Agent for any out-of-pocket expenses incurred by the Agent in
connection with the Subscription Offering or any of the transactions expressly
contemplated hereby, including, without limitation, the fees and disbursements
of its counsel (to the extent retention thereof has been previously approved by
the Offerors) and as to other out-of-pocket expenses incurred by the Agent,
including without limitation, communication and travel expenses. The
reimbursement provided for in this Section shall be in addition to all amounts
payable to the Agent pursuant to Sections 3 and 10 hereof and shall not be
conditioned upon the consummation of the transactions contemplated hereunder.
The Agent shall be reimbursed for all expenses within five days of receipt by
the Offerors of an itemized bill summarizing such expenses since the date of the
last bill, if any, to the date of

12
<PAGE>

the current bill. To the extent not previously paid, full payment of the
Agent's expenses shall be made in next day funds on the Closing Date provided
that the Offerors shall have received an itemized bill summarizing any
unreimbursed expenses at least two days before the Closing Date or on such later
date if the Offerors shall have received an itemized bill summarizing any
unreimbursed expenses at least two days before such date or, if the Subscription
Offering is not completed and is abandoned or terminated for any reason, within
five days of receipt by the Offerors of a reasonable accounting from the Agent
of its expenses.

SECTION 9. CONDITIONS TO THE OBLIGATIONS OF THE AGENT AND THE RELEASE
OF SHARES. The issuance and sale of the shares of Class A Common Stock, the
delivery of certificates in respect thereof, and the obligations of the Agent
hereunder shall be subject to the accuracy in all material respects of the
representations and warranties on the part of the Company and/or the Selling
Shareholder herein set forth as of the date hereof and as of the Closing Date,
to the accuracy in all material respects of the statements of the officers of
the Company and/or the Selling Shareholder made pursuant to the provisions
hereof, and to the performance in all material respects by the Company and/or
the Selling Shareholder of their respective obligations hereunder.

The issuance and sale of the shares of Class A Common Stock, the
delivery of certificates in respect thereof, and the obligations of the Agent on
the Closing Date shall also be subject to the following additional conditions
(which are solely for your benefit), unless waived in writing by the Agent:

(a) The Registration Statement shall have been declared effective by
the SEC; prior to the Closing Date, no stop order or other order suspending
the offering or the effectiveness of the Registration Statement or the
effectiveness of the Prospectus shall have been issued or proceedings therefor
instituted, initiated or threatened by the SEC, the Iowa Insurance Commissioner
or any court or governmental agency or body. The NASD, upon review of the terms
of this Agreement, shall not have objected to the Agent's performance of its
obligations hereunder or the terms set forth.

(b) The Agent shall have received on the Closing Date certificates on
behalf of each of the Company and the Selling Shareholder, dated as of the
Closing Date, signed by the chief executive officer or the chief financial
officer of each of the Company and the Selling Shareholder in form and substance
reasonably satisfactory to the Agent's counsel, to the effect that the signers
of each of such certificates have carefully examined the Registration Statement
and the Prospectus and that, in their opinion, at the time the Registration
Statement and the Prospectus became effective, neither the Registration
Statement nor the Prospectus contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or

13
<PAGE>

necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and since the
respective effective or approval dates of the Registration Statement and the
Prospectus, no event has occurred which should have been set forth in an
amendment of or supplement to the Registration Statement or the Prospectus which
has not been so set forth; no order has been issued by the SEC to suspend the
offering or the effectiveness of the Prospectus and no action for such purposes
has been instituted or, to the best of its knowledge, threatened by the SEC; and
to the further effect that each of the Company and the Selling Shareholder has
performed all agreements and has satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Date and that all its
representations and warranties contained in Section 5 hereof are true and
correct in all material respects on and as of the Closing Date, with the same
force and effect as though expressly made on the Closing Date.

(c) The Class A Common Stock shall have been qualified or be exempt
from qualification under the Blue Sky Laws of such states where the Class A
Common Stock has been offered.

(d) All necessary approvals and consents (including the approval of
the Iowa Insurance Commissioner) to the consummation of the Subscription
Offering have been obtained or provided for.

(e) The Agent shall have received on the Closing Date an opinion of
Sidley & Austin, special counsel for the Company and special transaction counsel
for the Selling Shareholder, dated as of the Closing Date, addressed to you, in
form and substance reasonably satisfactory to you. As to matters of Iowa law
Sidley & Austin may rely upon the opinion of James A. Smallenberger, Esq.

(f) At the time this Agreement is executed and also on the Closing
Date, there shall be delivered to the Agent a letter addressed to you, from KPMG
Peat Marwick LLP, independent accountants, the first one to be dated the date of
this Agreement, the second one to be dated the Closing Date, substantially
identical in form and substance to the unsigned form of letter heretofore
submitted to and approved by the Agent, and which shall contain information as
of a date within five business days of the date of such letter.

(g) The Agent's counsel shall have been furnished with such documents
as they may reasonably require for the purpose of enabling them to pass upon the
sale of the Class A Common Stock as herein contemplated and related proceedings
and in order to evidence the accuracy or completeness of any of the
representations or warranties or the fulfillment of any of the conditions herein
contained; and all proceedings taken by the Offerors in connection with sale of
the Class A Common Stock as herein contemplated shall

14
<PAGE>

be reasonably satisfactory in form and substance to the Agent and its counsel.

(h) The representations and warranties of each of the Company and the
Selling Shareholder contained herein shall be true and correct in all material
respects on the date of this Agreement and on and as of the Closing Date; each
of the Company and the Selling Shareholder shall have performed in all material
respects all covenants and agreements contained herein to be performed on its
part at or prior to such Closing Date.

(i) The Company or AmerUS Life shall have not have sustained, since
the date of the latest financial statements included in the Registration
Statement, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or any court or legislative or other governmental action,
order or decree, that is not set forth in the Prospectus.

(j) The Company and AmerUs Group shall have received gross
proceeds of at least $50 million from the Subscription Offering or a
combination of the Subscription Offering and the Public Offering.

SECTION 10. INDEMNIFICATION AND CONTRIBUTION.

(a) The Offerors hereby jointly and severally agree (i) to indemnify
and hold harmless the Agent, each of its directors, officers, other employees
and agents and any person who controls the Agent within the meaning of Section
15 or Section 20(a) of the Exchange Act (the Agent and each person being
indemnified hereinafter called an "Indemnified Party") against any and all
losses, claims, damages or liabilities, joint or several, to which an
Indemnified Party may become subject, under the Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise; (ii)
to reimburse promptly such Indemnified Party for reasonable legal or other
expenses incurred by such Indemnified Party in connection with investigating any
claims or preparing for or defending any actions, commenced or threatened,
whether or not resulting in any liability; and (iii) to reimburse promptly such
Indemnified Party for any amount paid in settlement of any claim or action,
commenced or threatened, if such settlement is effected with the written consent
of the Company; insofar as such losses, claims, damages, liabilities, expenses,
actions, or settlements, referred to above, arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, Prospectus or any amendment or supplement thereto,
or any application filed under any Blue Sky Law, or in any other document
executed by the Offerors in connection with or in contemplation of the
transactions contemplated by this Agreement, or in the information furnished or
otherwise made available to the Agent by the Offerors, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading or arise
out of any action or omission to act by the Offerors, their officers, directors,

15
<PAGE>

employees or agents, which action is willful or grossly negligent. The Offerors
shall be responsible for claims, liabilities, losses, damages or expenses
arising from or in connection with oral misstatements made by the Offerors which
are not based upon information provided by the Agent in writing or based upon
information contained in the Registration Statement, the Prospectus, any Blue
Sky Application or other information distributed in connection with the
Subscription Offering. The Offerors will not be liable in any such case to the
extent that any such loss, claim, damage, liability or expense arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, the Prospectus or any
amendment or supplement thereto or in any Blue Sky Application in reliance upon
and in conformity with written information furnished to the Offerors by or on
behalf of the Agent specifically for use therein or oral misstatements made by
the Agent which are not based upon information provided by the Offerors or based
upon information contained in the Registration Statement, the Prospectus, any
Blue Sky Application or other information distributed in connection with the
Subscription Offering. In the event that the Offerors advance any amounts
alleged to be due under this Section 10(a) to the Indemnified Party and it is
determined by a court of competent jurisdiction that the Indemnified Party is
not entitled to indemnification hereunder, then the Indemnified Party shall
repay to the Offerors, without interest, any amounts so advanced. The
indemnification obligations of the Offerors as provided above are in addition to
any liabilities the Offerors have under other agreements, under common law or
otherwise. The obligation of indemnity provided for hereunder is effective
immediately in respect of all events prior to or after the date hereof and shall
survive any expiration, termination or the cessation of this Agreement.

(b) The Agent agrees (i) to indemnify and hold harmless the Offerors,
each of their respective directors and officers and each person who controls the
Offerors within the meaning of the Act (the Offerors and each person being
indemnified hereinafter called an "Indemnified Party") against any and all
losses, claims, damages or liabilities, joint or several, to which an
Indemnified Party may become subject, under the Act, the Exchange Act, or other
federal or state statutory law or regulations, at common law or otherwise; (ii)
to reimburse promptly such Indemnified Party for reasonable legal or other
expenses incurred by such Indemnified Party in connection with investigating any
claims or preparing for or defending any actions, commenced or threatened,
whether or not resulting in defending any liability; and (iii) to reimburse
promptly such Indemnified Party for any amount paid in settlement of any claims
or actions, commenced or threatened, if such settlement is effected with the
written consent of the Agent; insofar as such losses, claims, damages,
liabilities, expenses, actions or settlements referred to above arise out of or
are based upon any untrue or alleged untrue statement of any material fact

16
<PAGE>

contained in the Registration Statement, the Prospectus or any amendment or
supplement thereto, or any Blue Sky Application, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
or arise out of any action or omission to act by the Agent, its officers,
directors, employees or agents, which action is willful or grossly negligent, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or in any Blue Sky Application, in reliance upon and in conformity with written
information furnished to the Offerors by the Agent specifically for use in the
preparation thereof. In the event that the Agent advances any amounts alleged
to be due under this Section 10(b) to an Indemnified Party and it is determined
by a court of competent jurisdiction that the Indemnified Party is not entitled
to indemnification hereunder, then the Indemnified Party, shall repay, without
interest, any amounts so advanced to the Agent. The indemnification obligations
of the Agent as provided above are in addition to any liabilities the Agent may
have under other agreements, under common law or otherwise. The obligation of
indemnity provided for hereunder is effective immediately in respect of all
events prior to or after the date hereof and shall survive any expiration,
termination or other cessation of this Agreement.

(c) Promptly after receipt by an Indemnified Party under this Section
of notice of the commencement of any action, such Indemnified Party shall, if a
claim in respect thereof is to be made against an Indemnified Party under this
Section, notify the indemnifying party in writing of the commencement thereof.
In no case shall an indemnifying party be liable under this Agreement with
respect to any loss, claim, damage, liability, expense, action or settlement
unless the indemnifying party shall have been notified in writing by the
Indemnified Party seeking indemnification, of the assertion or filing of the
claim or action giving rise to such loss, claim, damage, liability, expense,
action or settlement promptly after such Indemnified Party shall have been
advised of, or otherwise shall have received information as to, the assertion or
filing of such claim or action. In case any such action is brought against any
Indemnified Party, and such Indemnified Party notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
in, and, to the extent that it or he may wish, jointly with all other
Indemnifying Parties, similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such Indemnified Party; provided, however, if
the defendants in any such action include both the Indemnified Party and the
indemnifying party and the Indemnified Party shall have reasonably concluded,
based upon advice of its counsel, that there may be legal defenses available to
it or he and/or any other Indemnified Party which are

17
<PAGE>

different from or additional to those available to the indemnifying party, the
Indemnified Party shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such action on
behalf of such Indemnified Party. Upon receipt of notice from the Indemnified
Party to the indemnifying party of its election so to assume the defense of such
action, the indemnifying party will not be liable to such Indemnified Party
under this Section for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with defense thereof (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel) unless:

(i) the indemnifying party shall not have employed counsel
reasonably satisfactory to the Indemnified Party to represent the Indemnified
Party within a reasonable time after notice or commencement of the action; or

(ii) the indemnifying party has authorized the employment of
counsel at the expense of the indemnifying party.

(d) If the indemnification provided for in this section is
unavailable to an Indemnified Party in respect of any losses claims, damages or
liabilities referred to therein, then each indemnifying party, in lieu of
indemnifying such Indemnified Party, shall, subject to the limitations
hereinafter set forth, contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities:

(i) in such proportion as is appropriate to reflect the relative
benefits received by the Offerors and the Agent from the offering of the Class A
Common Stock in the Subscription Offering; or

(ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Offerors and the Agent in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations.

The respective relative benefits received by the Offerors and the
Agent shall be deemed to be in such proportion so that the Agent is responsible
for the portion of the losses, claims, damages or liabilities represented by the
percentage that the fee to be paid to the Agent in connection with the
solicitation of subscriptions described in Section 3 hereof bears to the actual
Purchase Price per share of the Class A Common Stock, and the Offerors are
responsible for the remaining portion. The relative fault of the Offerors and
the Agent shall be determined by reference to, among other things, whether the
untrue or alleged

18
<PAGE>

untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Offerors or by the Agent and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages and liabilities referred to above shall be
deemed to include, subject to the limitations set forth in paragraph (d) of this
Section, any legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending any action or claim.

The Offerors and the Agent agree that it would not be just and
equitable if contribution pursuant to this Section were determined by pro rata
or per capita allocation or by any other method or allocation which does not
take into account the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section, no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.

SECTION 11. EFFECTIVE DATE. This Agreement shall become effective
immediately.

SECTION 12. TERMINATION. Without limiting the right to terminate
this Agreement pursuant to any other provision hereof:

(a) This Agreement may be terminated by the Agent prior to the
Closing Date if, in the Agent's reasonable judgment:

(i) additional material governmental restrictions, not in force
and effect on the date hereof, shall have been imposed upon trading in
securities generally or a suspension or limitation in trading in securities
generally has occurred on the New York Stock Exchange or American Stock Exchange
or in the over-the-counter market, or quotations halted generally on the NASDAQ
System, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required by either of such exchanges
or the NASD or by order of the SEC or any other governmental authority; or the
engagement or continued engagement by the United States in major hostilities or
the declaration of a national emergency or war or a material decline in the
price of equity or debt securities if the effect of such hostilities, national
emergency or war or decline, in the Agent's reasonable judgment, makes it
impracticable or inadvisable to proceed with the Subscription Offering or the
delivery of shares on the terms and in the manner contemplated in the
Registration Statement and the Prospectus;

(ii) any event shall have occurred or shall exist which makes
untrue or incorrect in any material respect any statement or information
contained in the Registration Statement or

19
<PAGE>

the Prospectus or which is not reflected in the Registration Statement or the
Prospectus but should be reflected therein in order to make the statements or
information contained therein, in light of the circumstances under which they
were made, not misleading in any material respect (unless the Registration
Statement or the Prospectus, as appropriate, is amended or supplemented
appropriately in a timely manner to the satisfaction of the Agent); or

(iii) the Company or AmerUs Life shall have sustained a loss by
fire, flood, accident or other calamity which is materially adverse to the
property, business or financial condition of the Company or AmerUs Life, whether
or not such loss shall have been insured, or there shall have been, since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the business, condition or business affairs of the
Company whether or not arising in the ordinary course of business, or, which in
the Agent's reasonable judgment shall render it inadvisable to proceed with the
delivery of the Class A Common Stock in the Subscription Offering.

(b) If the Agent elects to terminate this Agreement as provided in
this Section, the Offerors shall be notified promptly by the Agent by telephone
or telegram, confirmed by letter.

Any termination pursuant to this Section 12 shall be without liability
on the part of the Agent to the Offerors or on the part of the Offerors to the
Agent (except for the expenses to be paid or reimbursed by the Offerors pursuant
to Section 3 or Section 8 hereof and except as to indemnification to the extent
provided in Section 10 hereof).

SECTION 13. REPRESENTATION AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of each of the Company and the Selling Shareholder and its directors
and officers, and of the Agent set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or
on behalf of the Agent or Offerors or any of their respective partners,
officers, agents or directors or any controlling person, as the case may be, and
will survive delivery or any payment for the Class A Common Stock sold
hereunder.

SECTION 14. NOTICE. All communications hereunder will be in writing
and, if sent to the Agent will be mailed, delivered or telegraphed and confirmed
to you c/o The Chicago Corporation, 208 South La Salle Street, Chicago, Illinois
60604; if sent to the Offerors will be mailed, delivered or telegraphed and
confirmed to each of the Company and the Selling Shareholder at 418 Sixth
Avenue, Des Moines, Iowa 50306.

20
<PAGE>

SECTION 15. SUCCESSORS. This Agreement will inure to the benefit of
and be binding upon each of the Company and the Selling Shareholder and the
Agent (including the participating dealers as provided herein) and their
respective successors (other than pursuant to Section 10). Nothing in this
Agreement is intended or shall be construed to give any person or entity other
than the parties hereto and their successors and other than described in Section
10) any legal or equitable right, remedy or claim under or in respect of this
Agreement.

SECTION 16. PARTIAL UNENFORCEABILITY. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.

SECTION 17. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Illinois.

SECTION 18. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties pertaining to the subject matter hereof
superseding any and all prior or contemporaneous oral or prior written
agreements, proposals, letters of intent and understandings, and cannot be
modified, changed, waived or terminated except by a writing which expressly
states that it is an amendment, modification or waiver, refers to this Agreement
and is signed by the party to be charged. No course of conduct or dealing shall
be construed to modify, amend or otherwise affect any of the provisions hereof.

SECTION 19. HEADINGS. Headings on the Sections in this Agreement are
for reference purposes only and shall not be deemed to have any substantive
effect.

SECTION 20. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same instrument.

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<PAGE>

If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement between the Offerors and the Agent,
all in accordance with its terms.

Very truly yours,

AMERUS LIFE HOLDINGS,INC.

By:______________________

AMERUS GROUP CO.

By:______________________

The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.

THE CHICAGO CORPORATION
("Agent")

By:_____________________

Title:__________________

<PAGE>

AMENDED AND RESTATED ARTICLES OF INCORPORATION

AMERUS LIFE HOLDINGS, INC.

TO THE SECRETARY OF STATE
OF THE STATE OF IOWA:

Pursuant to Section 1007 of the Iowa Business Corporation Act, Chapter 490,
Code of Iowa (1995), the corporation hereinafter named ("corporation"), does
hereby adopt the following Amended and Restated Articles of Incorporation:

1. The name of the corporation is AmerUs Life Holdings, Inc.

2. The Articles of Incorporation of the corporation are amended and
restated so as henceforth to read in their entirety as follows:

ARTICLE I

The name of the corporation is AmerUs Life Holdings, Inc.

ARTICLE II

The corporation shall have perpetual duration.

ARTICLE III

The purpose for which this corporation is organized is the transaction of
any and all lawful business for which corporations may be organized under the
Iowa Business Corporation Act.

ARTICLE IV

The aggregate number of shares of all classes of capital stock which the
corporation shall have authority to issue is one hundred and forty-five million
(145,000,000) shares, of which twenty million (20,000,000) shares shall be
Preferred Stock, no par value, issuable in one or more series, seventy-five
million (75,000,000) shares shall be Class A Common Stock, no par value, and
fifty million (50,000,000) shares shall be Class B Common Stock, no par value.

PREFERRED STOCK. The board of directors of the corporation is hereby
expressly

<PAGE>

authorized, at any time and from time to time, to divide the shares of
Preferred Stock into one or more series, to issue from time to time in
whole or in part the shares of Preferred Stock or the shares of any series
thereof, and in the resolution or resolutions providing for the issue of
shares of Preferred Stock or of a particular series to fix and determine
the voting powers, full or limited, or no voting powers, and such
designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof
that may be desired, to the fullest extent now or hereafter permitted by
Section 490.602 of the Iowa Business Corporation Act, as amended from time
to time; provided, however, in no event shall Preferred Stock have more
than one vote for each share of Preferred Stock.

CLASS A COMMON STOCK AND CLASS B COMMON STOCK. (A)(1) The powers,
preferences and rights of the Class A Common Stock and Class B Common
Stock, and the qualifications, limitations or restrictions thereof, shall
be in all respects identical, except as otherwise required by law or
expressly provided in these articles of incorporation.

(2) No person or persons shall own or have a beneficial interest in
shares of Class B Common Stock of the corporation except American Mutual
Holding Company, an Iowa mutual insurance holding company ("AMHC"), a
subsidiary of AMHC or any other mutual insurance holding company or
intermediate holding company which is expressly authorized by applicable
law (including, without limitation, the Iowa Code and the Commissioner of
Insurance of the State of Iowa to the extent that Iowa law is applicable)
to own or have a beneficial interest in Class B Common Stock (a "Permitted
Class B Holder"). Except as otherwise permitted by the second sentence of
Paragraph D (1) and by Paragraph D (8) hereof, the number of outstanding
shares of Class A Common Stock (excluding shares of Class A Common Stock
owned by a Permitted Class B Holder) shall not at any time exceed the
number of outstanding shares of Class B Common Stock plus outstanding
shares of Class A Common Stock owned by a Permitted Class B Holder by a
ratio of more than three to one.

(B) (1) At each annual or special meeting of shareholders, each holder
of Class A Common Stock shall be entitled to one (1) vote in person or by
proxy for each share of Class A Common Stock standing in his name on the
stock transfer records of the corporation and, except as provided in the
next succeeding sentence and in Paragraph (E) hereof, each holder of Class
B Common Stock shall be entitled to one (1) vote in person or by proxy for
each share of Class B Common Stock standing in his name on the stock
transfer records of the corporation. If, on the record date for
determining shares eligible to vote, the number of any outstanding shares
of Class A Common Stock (excluding shares of Class A Common Stock owned by
a Permitted Class B Holder) and shares of Preferred Stock having voting
rights, if any, (excluding shares of Preferred Stock owned by a Permitted
Class B Holder) equals or exceeds the number of outstanding shares of Class
B Common Stock, plus the number of outstanding shares of Class A Common
Stock owned by a Permitted Class B Holder, the voting rights for each share
of Class B Common Stock shall be equal to the aggregate number of shares of
Class A Common Stock (excluding shares of Class A Common Stock owned by a
Permitted Class B Holder) and Preferred Stock having voting rights, if
any, then

<PAGE>

outstanding (excluding shares of Preferred Stock owned by a Permitted
Class B Holder) plus one divided by the number of outstanding shares of
Class B Common Stock. Except as set forth herein or pursuant hereto, all
actions submitted to a vote of shareholders shall be voted on by the
holders of Class A Common Stock and Class B Common Stock (as well as the
holders of any series of Preferred Stock, if any, entitled to vote thereon)
voting together as a single class.

(2) The holders of Class A Common Stock and Class B Common Stock
shall each be entitled to vote separately as a class with respect to (i)
amendments to these Articles of Incorporation that alter or change the
powers, preferences or special rights of their respective class of stock so
as to affect them adversely and (ii) such other matters as may require
class votes under the Iowa Business Corporation Act.

(C) If and when dividends on the Class A Common Stock and Class B
Common Stock are declared payable from time to time by the board of
directors as provided in subdivision (H) of these Articles of
Incorporation, whether payable in cash, in property or in shares of stock
of the corporation, the holders of Class A Common Stock and the holders of
Class B Common Stock shall be entitled to share equally, on a per share
basis, in such dividends, except that if dividends are declared that are
payable in shares of Class A Common Stock or Class B Common Stock,
dividends shall be declared that are payable at the same rate on both
classes of stock and the dividends payable in shares of Class A Common
Stock shall be payable to holders of that class of stock and the dividends
payable in shares of Class B Common Stock shall be payable to holders of
that class of stock. If the corporation shall in any manner subdivide or
combine the outstanding shares of Class A Common Stock or Class B Common
Stock, the outstanding shares of the other such class of stock shall be
proportionally subdivided or combined in the same manner and on the same
basis as the outstanding shares of Class A Common Stock or Class B Common
Stock as the case may be, have been subdivided or combined.

(D)(1) Subject to the provisions of paragraph A(2) which requires a
certain minimum number of shares of Class B Common Stock to be outstanding
at all times, the holder of each outstanding share of Class B Common Stock
shall have the right at any time, or from time to time, at such holder's
option, to convert such share into one fully paid and non-assessable share
of Class A Common Stock, on and subject to the terms and conditions herein
set forth. In the event that Section 521A.14, subsection 7, or any
successor provision, of the Iowa Code ceases to require that a mutual
insurance holding company or an intermediate holding company own a
specified percentage of the capital stock of the Company having voting
rights or such requirement can be maintained even after conversion of the
Class B Common Stock to Class A Common Stock, the holder of each
outstanding share of Class B Common Stock shall have the right at any time,
or from time to time, at such holder's option, to convert such shares into
one fully paid and non-assessable share of Class A Common Stock, to the
extent permitted by the Iowa insurance laws and on and subject to the terms
and conditions herein set forth.

<PAGE>

(2) In order to exercise his, her or its conversion privilege, the
holder of any shares of Class B Common Stock to be converted shall present
and surrender the certificate representing such shares during usual
business hours at any office or agency of the corporation maintained for
the transfer of Class B Common Stock and shall deliver a written notice of
the election of the holder to convert the shares represented by such
certificate or any portion thereof specified in such notice. Such notice
shall also state the name or names (with address) in which the certificate
or certificates for shares of Class A Common Stock which shall be issuable
on such conversion shall be issued. If so required by the corporation, any
certificate for shares surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the corporation, duly
executed by the holder of such shares or his duly authorized
representative. Each conversion of shares of Class B Common Stock shall be
deemed to have been effected on the date (the "conversion date") on which
the certificate or certificates representing such shares shall have been
surrendered and such notice and any required instruments of transfer shall
have been received as aforesaid, and the person or persons in whose name or
names any certificate or certificates for shares of Class A Common Stock
shall be issuable on such conversion shall be deemed to have become
immediately prior to the close of business on the conversion date the
holder or holders of record of the shares of Class A Common Stock
represented thereby. The corporation shall not permit a conversion of
class B Common Stock to Class A Common Stock to the extent necessary to
maintain the minimum number of outstanding shares of Class B Common Stock
required by paragraph A(2).

(3) As promptly as practicable after the presentation and surrender
for conversion, as herein provided, of any certificate for shares of Class
B Common Stock, the corporation shall issue and deliver at such office or
agency, to or upon the written order of the holder thereof, certificates
for the number of shares of Class A Common Stock issuable upon such
conversion. In case any certificate for shares of Class B Common Stock
shall be surrendered for conversion of a part only of the shares
represented thereby, the corporation shall deliver at such office or
agency, to or upon the written order of the holder thereof, a certificate
or certificates for the number of shares of Class B Common Stock
represented by such surrendered certificate which are not being converted.
The issuance of certificates for shares of Class A Common Stock issuable
upon the conversion of shares of Class B Common Stock shall be made without
charge to the converting holder for any tax imposed on the corporation in
respect of the issue thereof. The corporation shall not, however, be
required to pay any tax which may be payable with respect to any transfer
involved in the issue and delivery of any certificate in a name other than
that of the holder of the shares being converted, and the corporation shall
not be required to issue or deliver any such certificate unless and until
the person requesting the issue thereof shall have paid to the corporation
the amount of such tax or has established to the satisfaction of the
corporation that such tax has been paid.

(4) Upon any conversion of shares of Class B Common Stock into shares
of Class A Common Stock pursuant hereto, no adjustment with respect to
dividends shall be made; only those dividends shall be payable on the
shares so converted as may be declared and may be payable to holders of
record of shares of Class B Common Stock on a date prior to the

<PAGE>

conversion date with respect to the shares so converted; and only those
dividends shall be payable on shares of Class A Common Stock issued upon
such conversion as may be declared and may be payable to holders of record
of shares of Class A Common Stock on or after such conversion date.

(5) In case of any consolidation or merger of the corporation as a
result of which the holders of Class A Common Stock shall be entitled to
receive stock, other securities or other property with respect to or in
exchange for Class A Common Stock or in case of any sale or conveyance of
all or substantially all the property or business of the corporation as an
entirety, a holder of a share of Class B Common Stock shall have the right
thereafter, so long as the conversion right hereunder shall exist, to
convert such share into the kind and amount of shares of stock and other
securities and properties receivable upon such consolidation, merger, sale
or conveyance by a holder of one share of Class A Common Stock and shall
have no other conversion right with regard to such share. The provisions
of this subparagraph shall similarly apply to successive consolidations,
mergers, sales or conveyances.

(6) All shares of Class B Common Stock which shall have been
surrendered for conversion as provided in this paragraph (D) shall no
longer be deemed to be outstanding, and all rights with respect to such
shares, including the rights, if any, to receive notices and to vote, shall
thereupon cease and terminate, except only the right of the holders
thereof, subject to the provisions of subparagraph (3) of this paragraph
(D), to receive shares of Class A Common Stock in exchange therefor.

(7) Such number of shares of Class A Common Stock as may from time to
time be required for such purpose shall be reserved for issuance upon
conversion of outstanding shares of Class B Common Stock; provided that
nothing contained herein shall be construed to preclude the corporation
from satisfying its obligations in respect of conversion by the delivery of
shares of Class A Common Stock which are held in the treasury of the
corporation. The corporation will endeavor to list the shares of Class A
Common Stock required to be delivered upon conversion prior to such
delivery upon each national securities exchange, or securities quotation
system, if any, upon which the outstanding Class A Common Stock is listed
at the time of such delivery.

(8) In the event that AMHC (or any successor mutual insurance holding
company) is converted from a mutual insurance holding company to a stock
company pursuant to Chapter 508B of the Iowa Code or any successor
provision, then, immediately, the outstanding shares of Class B Common
Stock shall automatically be converted into shares of Class A Common Stock
on the date and at the same time that the plan of conversion relating to
AMHC (or any successor mutual insurance holding company) is consummated.

(E)(1) Notwithstanding any other provision of this articles of
incorporation, the shares of Class B Common Stock plus outstanding shares
of Class A Common Stock owned by a Permitted Class B Holder shall at all
times carry the right to cast at least 50.1% of the

<PAGE>

votes of the outstanding shares of capital stock of the corporation (the
"Required Percentage"). A Permitted Class B Holder may pledge, subject to
a security interest or lien, encumber, or otherwise hypothecate shares of
Class B Common Stock only to the extent such shares exceed the Required
Percentage.

(2) Except as authorized by Paragraph (D) (with respect of the
conversion of Class B Common Stock to Class A Common Stock) and Paragraph
(E)(1) hereof, no shares of Class B Common Stock shall be conveyed,
transferred, assigned, pledged, subjected to a security interest or lien,
encumbered, or otherwise hypothecated or alienated by a Permitted Class B
Holder. Any conveyance, transfer, assignment, pledge, security interest,
lien, encumbrance or hypothecation or alienation of, in or on the Class B
Common Stock in violation of paragraph E(1) shall be void and ineffective
against the corporation in inverse order of the date of such conveyance,
transfer, assignment, pledge, security interest, lien, encumbrance, or
hypothecation or alienation as to the shares necessary to comply with the
provisions of Paragraph E(1).

(3) Any transfer, or attempted or purported transfer of any shares of
Class B Common Stock or any interest therein or right thereof, which would
result in the ownership or control by one or more persons who is not a
Permitted Class B Holder in violation of Paragraph E(1) or Paragraph E(2)
hereof shall be void and shall be ineffective against the corporation, and
the corporation shall not recognize, to the extent of such violation, the
purported transferee as a shareholder of the corporation for any purpose
whatsoever except the purpose of making a further transfer to a person who
is a Permitted Class B Holder.

(4) The corporation may, as a condition precedent to the transfer or
the registration of transfer of shares of Class B Common Stock, require the
furnishing of such representations, affidavits or other proof as it deems
necessary to establish that such transferee is a Permitted Class B Holder
or that the Permitted Class B Holder owns the Required Percentage. The
Board of Directors is authorized to adopt such bylaws and to take such
other actions as it may deem necessary or desirable to implement the
restriction set forth in Paragraph (E).

(F)(1) Shares of Class B Common Stock shall be registered in the
name(s) of the beneficial owner(s) thereof (as hereafter defined) and not
in "street" or "nominee" names. For the purposes of this paragraph (F),
the term "beneficial owner(s)" of any shares of Class B Common Stock shall
mean the person or persons who possess the power to vote or dispose, or to
direct the voting or disposition, of such shares.

(2) The corporation shall note on the certificates representing the
shares of Class B Common Stock that there are restrictions on transfer and
registration of transfer imposed by paragraph (E) and this paragraph (F)
and any other appropriate legend or legends required by the board of
directors of the corporation.

(G) The Class A Common Stock and Class B Common Stock are subject to
all the

<PAGE>

powers, rights, privileges, preferences and priorities of the Preferred
Stock as may be stated herein and as shall be stated and expressed in any
resolution or resolutions adopted by the board of directors pursuant to
authority expressly granted to and vested in it by the provisions of this
Article IV.

(H) After dividends to which the holders of Preferred Stock may then
be entitled under the resolutions creating any series thereof have been
declared and paid or set aside in funds for this purpose, dividends may be
declared and paid to the holders of Class A Common Stock and Class B Common
Stock in cash, property, or other securities of the corporation out of any
net profits or net assets of the corporation legally available therefor.

(I) Upon any liquidation, dissolution or winding-up of the
corporation, whether voluntary or involuntary, and after the holders, if
any, of the Preferred Stock of each series shall have been paid in full the
amounts to which they respectively shall be entitled or a sum sufficient
for such payment in full shall have been set aside, the remaining net
assets of the corporation shall be distributed pro rata to the holders of
the Class A Common Stock and Class B Common Stock in accordance with their
respective rights and interests, to the exclusion of the holders of the
Preferred Stock.

(J) Except as otherwise provided by law or by the resolution or
resolutions of the board of directors providing for the issue of any series
of the Preferred Stock, the holders of Class A Common Stock and Class B
Common Stock shall have the exclusive right to vote for the election of
directors and for all other purposes, each holder of the Class A Common
Stock and Class B Common Stock being entitled to vote as provided in
paragraphs (B) and (E)(1).

(K) The shares of common stock outstanding prior to the date of the
amendment and restatement of the Articles of Incorporation authorizing the
issuance of Class A Common Stock and Class B Common Stock shall
automatically be redesignated as Class B Common Stock upon the
effectiveness of such amendment and restatement.

<PAGE>

ARTICLE V

The business and affairs of the corporation shall be under the direction
of the Board of Directors. The authorized number of directors shall in no case
be fewer than seven (7) or more than twenty-one (21). The exact number of
directors shall be fixed from time to time by the Board of Directors pursuant to
a bylaw or resolution adopted by the affirmative vote of a majority of the
entire Board of Directors.

A. The directors of the corporation, other than those who may be
elected by the holders of any class or series of preferred stock, shall be
divided into three classes, as nearly equal in number as reasonably
possible: the first class, the second class and the third class. Each
such director shall serve for a term ending on the third annual meeting of
shareholders following the annual meeting at which such director was
elected; provided, however, that the directors first elected to the first
class shall serve for a term ending upon the election of directors at the
annual meeting next following the end of calendar year 1996, the directors
first elected to the second class shall serve for a term ending upon the
election of directors at the annual meeting next following the end of
calendar year 1997, and the directors first elected to the third class
shall serve for a term ending upon the election of directors at the annual
meeting next following the end of calendar year 1998.

B. At each annual election commencing at the first annual meeting
next following the end of calendar year 1996, the successors to the class
of directors whose term expires at that time shall be elected by the
shareholders to hold office for a term of three years to succeed those
directors whose term expires, so that the term of one class of directors
shall expire each year.

C. Notwithstanding the requirement that the three classes of
directors shall be as nearly equal in number of directors as reasonably
possible, in the event of any change in the authorized number of directors,
each director then continuing to serve as such shall nevertheless continue
as a director of the class of which he or she is a member until the
expiration of his or her current term, or his or her prior resignation,
disqualification, disability or removal. There shall be no cumulative
voting in the election of directors.

D. Subject to the rights of holders of a class or series of preferred
stock, any vacancy on the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office, an increase
in the number of directorships or other cause shall be filled only by the
affirmative vote of a majority of directors then in office, although less
than a quorum, or by the sole remaining director. A director so chosen
shall hold office for a term expiring at the annual meeting at which the
term of the class to which he or she has been elected expires. If the
number of directors is changed, any increase or decrease shall be
apportioned among the three classes by a two-thirds (2/3) vote of the
directors then in office. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.

E. Advance notice of shareholder nominations for the election of
directors and of

<PAGE>

business to be brought by shareholders before any meeting of the
shareholders of the corporation shall be given in the manner provided in
the Bylaws of the corporation.

ARTICLE VI

The corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation in the manner now or
hereafter prescribed by statute. Notwithstanding the foregoing, the affirmative
vote of at least a majority of the outstanding shares of Class A Common Stock
(excluding outstanding shares of Class A Common Stock owned by any Permitted
Class B Holder) shall be required to amend or repeal the second sentence of
paragraph (A)(2) of Article IV of these Articles of Incorporation.

ARTICLE VII

So long as AMHC is a mutual insurance holding company within the
meaning of Section 521A.14 of the Iowa Code or any successor provision, AMHC or
any Permitted Class B Holder shall have the preemptive right to purchase
unissued shares of voting stock (including, without limitation, Class A Common
Stock and Class B Common Stock) or any securities convertible into or
exchangeable for shares of voting stock or any options, warrants or rights to
acquire shares of voting stock ("Equity Purchase Rights") to the extent required
for AMHC or any Permitted Class B Holder to comply with the provisions of the
second sentence of paragraph (A)(2) of Article IV. The corporation is
authorized and empowered to enter into an agreement with AMHC and/or a
Permitted Class B Holder relating to Equity Purchase Rights.

ARTICLE VIII

A director of the corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for a breach of the director's duty
of loyalty to the corporation or its shareholders; (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law; (iii) for a transaction from which the director derives an improper
personal benefit; or (iv) under section 490.833 of the Iowa Business Corporation
Act. If the Iowa Business Corporation Act is hereafter amended to authorize the
further elimination or limitation of the liability of directors, then the
liability of a director of the corporation, in addition to the limitation on
personal liability provided herein, shall be eliminated or limited to the extent
of such amendment, automatically and without any further action, to the maximum
extent permitted by law. Any repeal or modification of this Article by the
shareholders of the corporation shall be prospective only and shall not
adversely affect any limitation on the personal liability or any other right or
protection of a director of the corporation with respect to any state of facts
existing at or prior to the time of such repeal or modification.

<PAGE>

3. The duly adopted Amended and Restated Articles of Incorporation
supersedes the original articles of incorporation and all amendments therein.

4. The Amended and Restated Articles of Incorporation amend the original
articles of incorporation which requires shareholders approval. The
designation, the number of outstanding shares, the number entitled to be voted
by the sole voting group entitled to vote on the said Amended and Restated
Articles of Incorporation, and the number of shares of the voting group which
indisputably voted with respect to the said Amended and Restated Articles of
Incorporation are as follows:

(a) Designation of voting group: Common Stock

(b) Number of outstanding shares of voting group:
10,000

(c) Number of shares of voting group entitled to vote separately on the
Amended and Restated Articles of Incorporation: None

(d) Number of shares of voting group which indisputably voted with respect
to the Amended and Restated Articles of Incorporation: 10,000

5. The total number of undisputed votes cast for the said Amended and
Restated Articles of Incorporation by the voting group entitled to vote on the
said Amended and Restated Articles of Incorporation is as follows:

Number of undisputed votes of voting group cast for the Amended
and Restated Articles of Incorporation: 10,000

6. The said number of votes cast for the said Amended and Restated
Articles of Incorporation was sufficient for the approval thereof by the said
voting group.

7. The effective time and date of these Amended and Restated Articles of
Incorporation shall be on filing with the Iowa Secretary of State.

Dated this 30th day of October, 1996.

AmerUs Life Holdings, Inc.

By: /s/ Roger K. Brooks
------------------------------------
Roger K. Brooks, Chairman, President and
Chief Executive Officer

By: /s/ James A. Smallenberger
------------------------------------
James A. Smallenberger, Secretary

<PAGE>

STATE OF IOWA )
) SS
COUNTY OF POLK )

On this 30th day of October, 1996, before me, the undersigned, a
Notary Public in and for said State, personally appeared Roger K. Brooks and
James A. Smallenberger, being by me duly sworn, did say that they are the
Chairman, President and Chief Executive Officer and Secretary, respectively, of
AmerUs Life Holdings, Inc., executing the within and foregoing instrument; that
said instrument was signed on behalf of said corporation by authority of its
Board of Directors; and the said Chairman, President and Chief Executive Officer
and Secretary, as such officers, acknowledged the execution of said instrument
to be the voluntary act and deed of said corporation, by it and by them
voluntarily executed.

/s/ Julie Lyn Ketterer
-----------------------------------
Notary Public in and for said State

Amended and Restated Articles of Incorporation of AmerUs Life Holdings, Inc.
October 30, 1996

<PAGE>

CERTIFICATE OF APPROVAL
ATTORNEY GENERAL

Pursuant to provisions of the Iowa Code, the undersigned approves the
Amended and Restated Articles of Incorporation of AmerUs Life Holdings, Inc.,
and finds them in conformance with the laws of the United States and with the
laws and Constitution of the State of Iowa.

THOMAS J. MILLER
Attorney General of Iowa

- ---------------- -----------------------------------
Date By: SCOTT M. GALENBECK
Assistant Attorney General

CERTIFICATE OF APPROVAL
COMMISSIONER OF INSURANCE

Pursuant to the provisions of the Iowa Code, the undersigned approves the
Amended and Restated Articles of Incorporation of AmerUs Life Holdings, Inc.

THERESE M. VAUGHAN
Commissioner of Insurance

- ---------------- -----------------------------------
Date By: ROBERT L. HOWE
Deputy Commissioner and
Chief Examiner

Amended and Restated Articles of Incorporation of AmerUs Life Holdings, Inc.
October 30, 1996

<PAGE>
Exhibit 4.1

CLASS A CLASS A
COMMON STOCK AmerUs COMMON STOCK
Life
NUMBER Holdings, Inc. SHARES
------ ------

SEE REVERSE FOR
INCORPORATED UNDER THE LAWS OF STATEMENTS RELATING TO
THE STATE OF IOWA RIGHTS, PREFERENCES,
PRIVILEGES AND
RESTRICTIONS, IF ANY
CUSIP 030732 10 1

This Certifies that

[Stock Certificate - Face]

is the record holder of

FULLY PAID AND NONASSESSABLE SHARES OF CLASS A COMMON STOCK, NO PAR VALUE, OF
------------------------AMERUS LIFE HOLDINGS, INC.------------------------
transferable on the books of the Corporation in person or by duly authorized
attorney on surrender of this Certificate properly endorsed. This Certificate
shall not be valid until countersigned and registered by the Transfer Agent and
Registrar.

WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.

Dated:

COUNTERSIGNED AND REGISTERED
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT AND REGISTRAR

AUTHORIZED SIGNATURE

[Signature] [Seal] [Signature]
Secretary Chairman, President and
Chief Executive Officer

<PAGE>
[Stock Certificate - Reverse]

The Corporation shall furnish without charge to each stockholder who so
requests a statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock of the
Corporation or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Such requests shall be made to
the Corporation's Secretary at the principal office of the Corporation.

The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in fill
according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ________ Custodian _________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to
survivorship and not as tenants Minors Act ____________________
in common (State)

UNIF TRF MIN ACT - _____ Custodian (until age _____)
________ under Uniform Transfers
to Minors
Act ____________________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list

FOR VALUE RECEIVED, _______________ hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

[ ]

________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

________________________________________________________________________________

________________________________________________________________________ Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint

_______________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.

Dated ______________________________

X __________________________________

X __________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER

Signature(s) Guaranteed

By_______________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.

<PAGE>

EXHIBIT 5.1

[LETTERHEAD]

November 6, 1996

AmerUs Life Holdings, Inc.
418 Sixth Avenue
Des Moines, Iowa, 50306-2499

Re: Registration of shares of Class A Common Stock,
no par value
------------------------------------------------

Ladies and Gentlemen:

Reference is made to the Registration Statement (Registration No. 333-
12239) on Form S-1 filed on September 18, 1996 by AmerUs Life Holdings, Inc., an
Iowa corporation (the "Company"), with the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended (the "Securities Act"), and
Amendment No. 1 thereto being filed with the SEC on November 6, 1996 (such
registration statement, as so amended, being hereinafter referred to as the
"Registration Statement") relating to the registration of Class A Common Stock,
no par value (the "Shares"), of the Company having a proposed maximum aggregate
offering price of $115,000,000.

The Shares offered in the Subscription Offering (as defined in the
Registration Statement) include up to 2,500,000 shares (the "Company Shares") to
be sold by the Company and up to 2,500,000 shares to be sold by a certain
Selling Shareholder named in the Registration Statement (the "Selling
Shareholder Shares").

I am familiar with the proceedings to date with respect to the
proposed offering and sale of the Shares, and have examined such records,
documents and questions of law, and satisfied myself as to such matters of fact,
as I have considered relevant and necessary as a basis for this opinion.

Based on the foregoing, I am of the opinion that:

1. The Company is duly incorporated and validly existing under the
laws of the State of Iowa.

2. The Company Shares will be legally issued, fully paid and non-
assessable when (i) the Registration Statement, as finally amended, shall have
become effective under the Securities Act; (ii) the Company's Board of Directors
or a duly authorized committee thereof shall have duly adopted final resolutions
authorizing the issuance and sale of the Company Shares as contemplated by the
Registration Statement; and (iii)

<PAGE>

AmerUs Life Holdings, Inc.
November 6, 1996
Page Two

certificates representing the Company Shares shall have been duly executed,
countersigned and registered and duly delivered to the purchasers thereof
against payment of the agreed consideration therefor.

3. The Selling Shareholder Shares will be legally issued, fully paid
and non-assessable when the Registration Statement, as fully amended, shall have
become effective under the Securities Act.

I do not find it necessary for the purpose of this opinion to cover,
and accordingly I express no opinion as to, the application of the securities or
blue sky laws of the various states to the sale of the Shares.

This opinion is limited to the General Corporation Law of the State of
Iowa and the Securities Act.

I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to all references to this opinion included in or made
a part of the Registration Statement.

Very truly yours,

/s/ James A. Smallenberger
James A. Smallenberger, Esq.

<PAGE>

INTERCOMPANY AGREEMENT

BY AND AMONG

AMERICAN MUTUAL HOLDING COMPANY

AMERUS GROUP CO.

AND

AMERUS LIFE HOLDINGS, INC.

DATED AS OF NOVEMBER 1, 1996.

<PAGE>

ARTICLE I

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Certain Definitions. . . . . . . . . . . . . . . . . . . . 1

ARTICLE II

COSTS AND EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.1 Allocation of Costs and Expenses . . . . . . . . . . . . . 4

ARTICLE III

CORPORATE GOVERNANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.1 AMHC Consent to Certain Actions. . . . . . . . . . . . . . 5

ARTICLE IV

LICENSING AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4.1 Grant of License . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4.2 AmerUs Group Guidelines and Standards. . . . . . . . . . . 8
SECTION 4.3 AmerUs Group Retention of Ownership. . . . . . . . . . . . 8
SECTION 4.4 License Fee. . . . . . . . . . . . . . . . . . . . . . . .10
SECTION 4.5 Transactions Affecting the Company, AmerUs Group,
and the Marks. . . . . . . . . . . . . . . . . . . . . . .11
SECTION 4.6 Termination of License . . . . . . . . . . . . . . . . . .11
SECTION 4.7 Further Assurances; Attorney-in-Fact . . . . . . . . . . .12
SECTION 4.8 Trademark Usage Marking Requirements and Quality Control .13
SECTION 4.9 Name Changes; Discontinuance of Use of Certain Marks . . .13

ARTICLE V

EQUITY PURCHASE RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . .14
SECTION 5.1 Equity Purchase Rights . . . . . . . . . . . . . . . . . .14

ARTICLE VI

FINANCIAL AND OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . .17
SECTION 6.1 Ownership Threshold. . . . . . . . . . . . . . . . . . . .17
SECTION 6.2 AMHC Annual Statements . . . . . . . . . . . . . . . . . .17
SECTION 6.3 Confidentiality. . . . . . . . . . . . . . . . . . . . . .18

ARTICLE VII

REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . .19
SECTION 7.1 Piggyback Registrations. . . . . . . . . . . . . . . . . .19
SECTION 7.2 Requested Registration . . . . . . . . . . . . . . . . . .20
SECTION 7.3 Registration Procedures. . . . . . . . . . . . . . . . . .22
SECTION 7.4 Restriction on Disposition of Registrable Shares.. . . . .26

-i-

<PAGE>

SECTION 7.5 Selection of Underwriters. . . . . . . . . . . . . . . . .27
SECTION 7.6 Registration Expenses. . . . . . . . . . . . . . . . . . .27
SECTION 7.7 Conversion of Other Securities . . . . . . . . . . . . . .27
SECTION 7.8 Rule 144.. . . . . . . . . . . . . . . . . . . . . . . . .27
SECTION 7.9 Transfer of Registration Rights. . . . . . . . . . . . . .28

ARTICLE VIII

BUSINESS AND REGISTRATION STATEMENT INDEMNIFICATION . . . . . . . . . . .28
SECTION 8.1 General Cross Indemnification. . . . . . . . . . . . . . .28
SECTION 8.2 Registration Statement Indemnification . . . . . . . . . .30
SECTION 8.3 Contribution . . . . . . . . . . . . . . . . . . . . . . .31
SECTION 8.4 Procedure. . . . . . . . . . . . . . . . . . . . . . . . .32
SECTION 8.5 Other Matters. . . . . . . . . . . . . . . . . . . . . . .33
SECTION 8.6 Infringement . . . . . . . . . . . . . . . . . . . . . . .33

ARTICLE IX

OTHER PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
SECTION 9.1 Keepwell Payments. . . . . . . . . . . . . . . . . . . . .34
SECTION 9.2 Business Relationship. . . . . . . . . . . . . . . . . . .34
SECTION 9.3 Management Services. . . . . . . . . . . . . . . . . . . .34
SECTION 9.4 Miscellaneous Services . . . . . . . . . . . . . . . . . .35
SECTION 9.5 Regulatory Approvals . . . . . . . . . . . . . . . . . . .35

ARTICLE X

DISPUTE RESOLUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . .36
SECTION 10.1 Negotiation. . . . . . . . . . . . . . . . . . . . . . . .36
SECTION 10.2 Arbitration. . . . . . . . . . . . . . . . . . . . . . . .36
SECTION 10.3 Confidentiality. . . . . . . . . . . . . . . . . . . . . .37

ARTICLE XI

MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
SECTION 11.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . .38
SECTION 11.2 Binding Nature of Agreement. . . . . . . . . . . . . . . .38
SECTION 11.3 Descriptive Headings . . . . . . . . . . . . . . . . . . .38
SECTION 11.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . . .38
SECTION 11.5 Governing Law. . . . . . . . . . . . . . . . . . . . . . .39
SECTION 11.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . .39
SECTION 11.7 Severability . . . . . . . . . . . . . . . . . . . . . . .39
SECTION 11.8 Amendment and Modification . . . . . . . . . . . . . . . .39
SECTION 11.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . .39
SECTION 11.10 No Assignment. . . . . . . . . . . . . . . . . . . . . . .40
SECTION 11.11 Recapitalization, Dilution
Adjustments, etc. . . . . . . . . . . . . . . . . . . . .40
SECTION 11.12 Further Assurances . . . . . . . . . . . . . . . . . . . .40
SECTION 11.13 No Third Party Beneficiaries . . . . . . . . . . . . . . .40
SECTION 11.14 Effectiveness of Certain Provisions. . . . . . . . . . . .40

-ii-

<PAGE>

INTERCOMPANY AGREEMENT

INTERCOMPANY AGREEMENT, dated as of November 1, 1996, by and among
American Mutual Holding Company, an Iowa mutual insurance holding company
("AMHC"), AmerUs Group Co., an Iowa corporation ("AmerUs Group"), and AmerUs
Life Holdings, Inc., an Iowa corporation (the "Company").

AMHC is the indirect owner of all of the issued and outstanding common
stock of the Company as of the date hereof. In contemplation of the Company
ceasing to be so wholly owned by AMHC and for good and valuable consideration,
the receipt and adequacy of which is acknowledged, the parties hereto, intending
to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1 CERTAIN DEFINITIONS. In addition to the terms defined
elsewhere in this Agreement, the following terms shall have the following
meanings:

"AGREEMENT" and "HEREOF" and "HEREIN" means this Intercompany
Agreement, including all amendments, modifications and supplements and any
exhibits or schedules to any of the foregoing, and shall refer to the Agreement
as the same may be in effect at the time such reference becomes operative.

"AMERUS AFFILIATED GROUP" means, collectively, AMHC and all of its
direct and indirect subsidiaries now or hereafter existing, other than the
Company and its Subsidiaries.

"AMERUS LIFE" means AmerUs Life Insurance Company, an Iowa
corporation.

"BUSINESS DAY" or "BUSINESS DAY" means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in Des Moines, Iowa are authorized or obligated by law or executive order to
close.

"CLASS A COMMON STOCK" means the Class A Common Stock, no par value,
of the Company.

"CLASS B COMMON STOCK" means the Class B Common Stock, no par value,
of the Company.

"COMMON STOCK" means, collectively, the Class A Common Stock and Class
B Common Stock and any other class or series of common stock of the Company
hereafter created.

<PAGE>

"EQUITY PURCHASE SHARES" means shares of Voting Stock or any
securities convertible into or exchangeable for shares of Voting Stock or any
options, warrants or rights to acquire shares of Voting Stock.

"EXCHANGE ACT" means the Securities Exchange Act of 1934.

"FAIR MARKET VALUE" means, with respect to shares of Voting Stock, the
fair market value thereof as jointly determined by the Company and AMHC or, in
the event the Company and AMHC are unable to agree, as determined by a mutually
acceptable nationally recognized investment banking or other financial advisory
firm.

"GAAP" means United States generally accepted accounting principles.

"IPO S-1" means the Company's registration statement on Form S-1
relating to the registration of certain shares of Class A Common Stock under the
Securities Act, as the same may be amended or supplemented from time to time.

"INDEBTEDNESS" means, with respect to any Person, any liability of
such Person in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments and shall also include (a) any liability of
such Person under any agreement related to the fixing of interest rates on any
Indebtedness, (b) any capitalized lease obligations of such Person (if and to
the extent the same would appear on a balance sheet of such Person prepared in
accordance with GAAP), (c) reimbursement obligations of such Person in respect
of letters of credit (regardless of whether such items would appear on a balance
sheet of such Person) and (d) guarantees by such Person with respect to the
items described in (a), (b) and (c) above (regardless of whether such guarantees
would appear on a balance sheet of such Person).

"INITIAL PUBLIC OFFERING" means the proposed initial public offering
of Common Stock as contemplated by the IPO S-1.

"KEEPWELL" means any guaranty, keepwell, net worth or financial
condition maintenance agreement of or by any member of the AmerUs Affiliated
Group provided to any Person (including, but not limited to, any insurance
regulatory authority) with respect to any actual or contingent obligation of the
Company, or any Subsidiary of the Company.

"LICENSE TRIGGER DATE" means the date on which the members of the
AmerUs Affiliated Group shall cease to own, in the aggregate, more than 50% of
the voting power of the Outstanding Voting Stock.

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"OUTSTANDING VOTING STOCK" means the shares of the Voting Stock issued
and outstanding, and shall not include shares of Voting Stock held by the
Company as treasury stock or by any subsidiary of the Company.

"PERSON" means any individual, corporation, partnership, joint
venture, limited liability company, association or other business entity and any
trust, unincorporated organization or government or any agency or political
subdivision thereof.

"PUBLIC COMPANY STOCK" means any class or series of Voting Stock
registered under the Exchange Act and broadly held and actively traded by public
stockholders.

"PROSPECTUS" means the prospectus or prospectuses included in any
Registration Statement, as amended or supplemented by any prospectus supplement
and by all other amendments and supplements to such prospectus, including post-
effective amendments and all material incorporated by reference in such
prospectus or prospectuses.

"REGISTRABLE SHARES" means any shares of Common Stock or any other
equity security issued by the Company held by any member of the AmerUs
Affiliated Group or by any transferee thereof described in Section 7.9 hereof.

"REGISTRATION STATEMENT" means any registration statement of the
Company filed with the SEC under the Securities Act, including, but not limited
to, the IPO S-1, and any registration statement which relates to any of the
Registrable Shares, including in each such case the Prospectus relating thereto,
amendments and supplements to such Registration Statement, including post-
effective amendments, all exhibits and all materials incorporated by reference
in such Registration Statement and Prospectus.

"REGULATION S-K" means Regulation S-K of the General Rules and
Regulations under the Securities Act.

"REGULATION S-X" means Regulation S-X of the General Rules and
Regulations under the Securities Act.

"REIMBURSEMENT AGREEMENTS" means, collectively, all agreements in
existence on the date of this Agreement to which the Company or a Subsidiary is
a party and a member of the AmerUs Affiliated Group is a party which relate to
the provision of administrative, management or data processing services by the
Company or a Subsidiary or a member of the AmerUs Affiliated Group or vice verse
and provide for the reimbursement, payment or allocation of the costs, fees or
expenses of such services.

"SEC" means the Securities and Exchange Commission.

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<PAGE>

"SECURITIES ACT" means the Securities Act of 1933.

"SUBSCRIPTION OFFERING" means the Subscription Offering to
policyholders of AmerUs Life undertaken in conjunction with the Initial Public
Offering.

"SUBSIDIARY" of the Company shall include all corporations,
partnerships, joint ventures, limited liability companies, associations and
other entities (a) in which the Company owns (directly or indirectly) fifty
percent or more of the outstanding voting stock, voting power, partnership
interests or similar ownership interests, (b) of which the Company otherwise
directly or indirectly controls or directs the policies or operations or (c)
which would be considered subsidiaries of the Company within the meaning of
Regulation S-K or Regulation S-X.

"TRANSACTIONS" means the Subscription Offering, the Initial Public
Offering and any corporate reorganization or transaction undertaken in
connection with the Subscription Offering or the Initial Public Offering to
which the Company or any Subsidiary is a party.

"TRIGGER DATE" means the date on which the members of the AmerUs
Affiliated Group shall cease to own, in the aggregate, more than 50% of the
voting power of the Outstanding Voting Stock.

"UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING" means a
registration in which securities of the Company are sold to underwriters for
reoffering to the public.

"VOTING STOCK" means all securities issued by the Company having the
ordinary power to vote in the election of directors of the Company, other than
securities having such power only upon the occurrence of a default or any other
extraordinary contingency.

"WHOLLY OWNED SUBSIDIARY" of the Company shall include all
Subsidiaries of the Company in which the Company owns (directly or indirectly)
all of the outstanding voting stock, voting power, partnership interests or
similar ownership interests, except for director's qualifying shares in nominal
amounts.

ARTICLE II

COSTS AND EXPENSES

SECTION 2.1 ALLOCATION OF COSTS AND EXPENSES. The Company shall pay
(or, to the extent incurred by and paid for by

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any member of the AmerUs Affiliated Group, will promptly reimburse such member
of the AmerUs Affiliated Group for any and all amounts so paid) for all fees,
costs and expenses incurred by the Company or any member of the AmerUs
Affiliated Group in connection with the Transactions, including, but not limited
to, any and all fees, costs and expenses related to (a) the preparation and
negotiation of this Agreement and of all of the documentation related to the
Transactions and all related transactions, (b) the preparation and execution or
filing of any and all further documents, agreements, forms, applications,
contracts or consents associated with the Transactions and all related
transactions, (c) the Company's formation and organization, (d) the preparation,
printing and filing of the registration statement for the Initial Public
Offering, and any other registration statements relating to any of the
Transactions, including all fees and expenses of complying with applicable
federal, state or foreign securities laws and domestic or foreign securities
exchange rules and regulations, together with fees and expenses of counsel
retained to effect such compliance, (e) the preparation, printing and
distribution of each of the prospectuses for the Initial Public Offering and any
other financing Transactions and (f) the listing of the Class A Common Stock and
any other securities of the Company on any domestic or foreign securities
exchange.

ARTICLE III

CORPORATE GOVERNANCE

SECTION 3.1 AMHC CONSENT TO CERTAIN ACTIONS. Until the date on which
the members of the AmerUs Affiliated Group shall cease to own, in the aggregate,
at least 50.1% of the voting power of the Outstanding Voting Stock, the Company
will not permit any of the following to occur without the prior written consent
of AMHC:

(i) any consolidation or merger of the Company with or into
any Person or of any Person with or into the Company (other than a
merger or consolidation of the Company with or into a Wholly Owned
Subsidiary of the Company);

(ii) any consolidation or merger of any Subsidiary of the
Company with or into any Person or of any Person with or into any
Subsidiary of the Company (other than a merger or consolidation of a
Subsidiary of the Company with or into a Wholly Owned Subsidiary of
the Company);

(iii) the entry into or consummation by the Company or a
Subsidiary of the Company of any

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transaction, or series of related transactions valued in the aggregate,
involving consideration in excess of $10 million with any affiliate of the
Company (other than a member of the AmerUs Affiliated Group), other than
(x) the Transactions, (y) transactions which are on terms substantially the
same as or more favorable to the Company than those that would be available
from an unaffiliated third party, and (z) transactions between or among any
of the Company and its Wholly Owned Subsidiaries;

(iv) any sale, lease, exchange or other disposition or any
acquisition (by way of merger or consolidation, acquisition of stock,
other securities or assets, or otherwise), in each case by the Company
or any Subsidiary of the Company, directly or indirectly in a single
transaction, or series of related transactions valued in the
aggregate, involving consideration in excess of $20 million (other
than acquisitions, dispositions and transfers of securities pursuant
to portfolio investment decisions in the ordinary course of business
and transactions to which the Company and one or more Wholly Owned
Subsidiaries of the Company are the only parties);

(v) any increase or decrease in the authorized capital stock
of the Company or the creation of any class or series of capital stock
of the Company (other than the creation of a series of preferred stock
which is not convertible or exchangeable into Common Stock and which
only has voting rights required by law);

(vi) any issuance by the Company or any Subsidiary of the
Company of any shares of its respective capital stock or any options,
warrants or rights to acquire such capital stock or securities
convertible into or exchangeable for capital stock, except (w) up to
three million shares of Common Stock of the Company issuable pursuant
to employee and director stock option, profit sharing and other
benefit plans of the Company and its Subsidiaries and any options
exercisable for such shares of Common Stock, (x) the issuance of
preferred stock which is not convertible or exchangeable into Common
Stock and which only has voting rights required by law, (y) the
issuance of shares of capital stock of a Wholly Owned Subsidiary of
the Company and (z) pursuant to the Transactions;

(vii) the dissolution, liquidation or winding up of the Company
or AmerUs Life;

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(viii) any corporate action by the Company which would cause the
Company or AmerUs Life to violate the requirements of Section 521A.14
of the Iowa insurance laws or any successor provision.

ARTICLE IV

LICENSING AGREEMENT

SECTION 4.1 GRANT OF LICENSE. AmerUs Group hereby grants, or to the
extent another member of the AmerUs Affiliated Group owns the Marks (as defined
below) AmerUs Group will cause such member to grant, to the Company a non-
exclusive license (which is revocable under the circumstances set forth below)
(the "License") to use the name "AmerUs" and the trademarks (including the
trademarks pending approval that are referred to in Section 4.3(c) hereto) as
are specified in EXHIBIT A hereto, as such EXHIBIT A may be amended from time
to time in accordance with Section 4.3(b) hereof (such name and trademarks
hereinafter collectively referred to as the "Marks"), but only in the manner
identified in EXHIBIT A hereto or otherwise approved in advance in writing by
AmerUs Group, in each case, solely for the purpose of identifying and
advertising the insurance business and activities related to such insurance
business (E.G., claims services, payment services, and insurance products) in
the United States as presently conducted by the Company and AmerUs Life and as
may be conducted from time to time subsequently, subject to any and all legal
requirements and legal or AmerUs Group policy limitations on such licensing
which may arise from time to time in any jurisdiction (the "Scope of the
License"). Notwithstanding the foregoing, the Company shall only use the Marks
in connection with operations, services and products of a nature and quality
specified by AmerUs Group or, if not so specified, which are at least of a
nature and quality equal to that currently used by the Company or any of its
Subsidiaries in connection with the Marks. The Company shall have no right to
license or sublicense the Marks or the use thereof; PROVIDED, HOWEVER, that any
Wholly Owned Subsidiary of the Company which is specifically approved in advance
in writing by AmerUs Group (a "Designated Subsidiary") and which enters into an
agreement (a "Designated Subsidiary Agreement") may use the Marks in accordance
with the terms of such agreement and in the forms and manner and in connection
with such operations, services and products of such Designated Subsidiary as
shall be identified and approved in advance in writing by AmerUs Group. This
Agreement and any Designated Subsidiary Agreement supersedes all prior
agreements (whether written, oral or implied) between any member of the AmerUs
Affiliated Group and the Company or any Subsidiary of the Company, with respect
to the use of the Marks.

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<PAGE>

Notwithstanding the foregoing, in the event that a Designated
Subsidiary Agreement is terminated in accordance with the provisions thereof,
from and after the date of such termination, the Scope of the License shall
automatically be deemed amended (without any action by the parties hereto or
thereto) to no longer license hereunder the Marks for use by such Designated
Subsidiary, and such Designated Subsidiary shall, and the Company shall cause
such Designated Subsidiary to, promptly cease all use of the Marks in connection
with all of such Designated Subsidiary's operations, products and services.

The Company and each Designated Subsidiary shall execute all
additional documents which AmerUs Group may request, both prior and subsequent
to the expiration or earlier termination of the License, in order to perfect,
maintain, defend or terminate any right of any party in the Marks in any country
of the world, as determined by AmerUs Group in its sole discretion.

SECTION 4.2 AMERUS GROUP GUIDELINES AND STANDARDS. The Company
agrees that all advertising, promotion and use of the Marks by the Company and
its Designated Subsidiaries shall in all material respects be consistent with
such AmerUs Group guidelines as may be issued from time to time. The Company
agrees that, in the conduct of the business and activities of the Company and
its Designated Subsidiaries under the Marks, it shall, and shall cause each
Designated Subsidiary to, adhere to the appropriate ethical standards pertaining
to the Company's and its Designated Subsidiaries' businesses and operations, and
shall, and shall cause each Designated Subsidiary to, do nothing to bring
disrepute to or in any manner damage the goodwill symbolized by the Marks and
shall make available to AmerUs Group any requested information necessary for
AmerUs Group to evaluate any such effect on said goodwill.

SECTION 4.3 AMERUS GROUP RETENTION OF OWNERSHIP. (a) The Company
acknowledges and agrees that AmerUs Group, or such other member of the AmerUs
Affiliated Group referred to in the first sentence of Section 4.1 hereof, as the
case may be, is the owner of all of the right, title and interest in the Marks
and all goodwill associated therewith and acknowledges the validity of all
trademark and service mark registration of each member of the AmerUs Affiliated
Group pertaining thereto. The Company agrees that it shall, and shall cause
each of its officers, directors and subsidiaries to, uphold the goodwill
inherent in the Marks and to assist AmerUs Group in any way reasonably possible
to protect the rights of AmerUs Group and the other members of the AmerUs
Affiliated Group therein. All use of the Marks by the Company and all
Designated Subsidiaries (including all past, present and future use), and the
goodwill generated thereby, shall inure to the benefit of AmerUs Group and shall
not vest in the Company or in any Designated Subsidiary,

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<PAGE>

and, for purposes of trademark registration, all use of the Marks by the Company
and the Designated Subsidiaries shall be deemed to have been made for the
benefit of AmerUs Group. The Company and the Designated Subsidiaries shall not,
without the written consent of AmerUs Group, file or prosecute any trademark or
service mark application to register the Marks or any trademarks or service
marks similar thereto.

(b) Additional trademarks and service marks using the AmerUs Group
name may be added to EXHIBIT A hereto if (i) the Company makes a written request
therefor to such effect, which request shall specify in reasonable detail a
description or drawing of such trademarks or service marks and a description of
the manner in which such marks are to be used, (ii) the Company shall have
provided to AmerUs Group all additional information requested by AmerUs Group
with respect thereto during the period referred to in clause (iii) below, and
(iii) within 5 Business Days after its receipt of such written request referred
to in clause (i) above AmerUs Group does not notify the Company that it does not
consent to the inclusion of such trademark or service mark on EXHIBIT A hereto.
If the conditions set forth in clause (i), (ii) and (iii) above are satisfied,
EXHIBIT A shall be deemed to have been automatically amended, as of the first
date all such conditions are satisfied, to include such mark (and such mark
shall become part of the Marks) and promptly thereafter the parties shall
execute and deliver to each other a written instrument acknowledging such
amendment and attaching EXHIBIT A, as so amended, thereto. The Company
acknowledges that AmerUs Group shall be the owner of all of the right, title and
interest in all the marks which become part of the Marks subsequently to the
date hereof. The addition of Marks to EXHIBIT A hereto shall not effect the
Scope of the License or any other term thereof.

(c) The Company acknowledges that all trademark or service mark
applications pending as of the date hereof of (i) the Company or any Subsidiary
of the Company which contain the name "AmerUs" and (ii) any member of the AmerUs
Affiliated Group, have been filed for the benefit of AmerUs Group, or such other
member of the AmerUs Affiliated Group as such application may specify, and
AmerUs Group, or such other member, is the beneficial owner of all right, title
and interest in such Marks.

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<PAGE>

SECTION 4.4 LICENSE FEE. From and after the License Trigger Date and
until such time as the License completely expires or completely terminates in
accordance with the terms of this Agreement, the Company shall pay AmerUs Group
an annual fee (the "License Fee") as set forth below:

Amount of Annual
Period License Fee
------ -----------

1st 12-month period following the License $100,000
Trigger Date

2nd 12-month period following the License $200,000
Trigger Date

3rd 12-month period following the License $300,000
Trigger Date

4th 12-month period following the License $400,000
Trigger Date

Each 12-month period thereafter $500,000

The License Fee with respect to each 12-month period referred to above shall be
payable in equal installments quarterly in advance on the first business day of
each calendar quarter (each a "Quarterly Payment Date") commencing on the first
Quarterly Payment Date following the License Trigger Date. Within two Business
Days following the License Trigger Date, the Company shall pay AmerUs Group a
fee equal to the product of (i) $274 and (ii) the number of days elapsing from
and including the License Trigger Date to and excluding the first Quarterly
Payment Date occurring after the License Trigger Date, in payment of the fee for
such interim period. If the Company and the Designated Subsidiaries shall
completely terminate the rights of the Company and all Designated Subsidiaries
to use in any manner all of the Marks (a "Use Termination"), then the Company's
obligation to pay such fee shall terminate after the payment in full of all
quarterly payments due on or before the Quarterly Payment Date immediately
preceding the date of such Use Termination. Upon a Use Termination, AmerUs
Group shall reimburse the Company in an amount equal to the product of (i) the
Per Diem Refund Amount (as defined below) and (ii) the number of days remaining
after the date of termination but prior to the Quarterly Payment Date next
succeeding such date of termination. As used herein, the "Per Diem Refund
Amount" means a fraction, the numerator of which is the annual License Fee
applicable to the 12-month period in which the Use Termination has occurred and
the denominator of which is 365.

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<PAGE>

SECTION 4.5 TRANSACTIONS AFFECTING THE COMPANY, AMERUS GROUP, AND THE
MARKS. The Company shall not, and shall cause each of its Subsidiaries not to,
take any action with respect to the following without informing AmerUs Group in
advance in writing of all material facts relating thereto and without obtaining
AmerUs Group's prior written consent thereto:

(a) the commencement, settlement, defense of, consent to a
judgment or decree or other activity with respect to any suit, action
or proceeding before any federal, state, local or foreign court,
agency, authority, instrumentality, arbitration panel or other
governmental body or authority involving the Marks;

(b) any changes in the Company's or its Subsidiaries' names,
logos, signs, trademarks or other identifications which might
reasonably be expected to affect the appearance of, the reputation of
or the goodwill associated with the Marks or any member of the AmerUs
Affiliated Group; or

(c) any television, radio, newspaper, magazine or other
advertising, promotional or marketing campaign or strategy and any
television, radio, newspaper, magazine or other advertisement using
the Marks or using or referring, directly or indirectly, to any member
of the AmerUs Affiliated Group (an "Advertising Campaign"); PROVIDED,
HOWEVER, that an Advertising Campaign shall be deemed to be consented
to by AmerUs Group in the event that AmerUs Group does not notify the
Company in writing that it is not consenting to such Advertising
Campaign within 5 Business Days following the Company providing AmerUs
Group with written notice of such planned Advertising Campaign and
complete descriptions and presentations thereof; PROVIDED, FURTHER,
that the Company is expressly allowed to continue or implement any
Advertising Campaign that is substantially similar to any Advertising
Campaign in effect on the date hereof or used by any Subsidiary of the
Company during the 36-month period immediately prior to the date
hereof.

SECTION 4.6 TERMINATION OF LICENSE. (a) The License granted
pursuant to this Article IV shall automatically expire (subject to earlier
termination in accordance with Section 4.6(d) hereof) upon the earlier to occur
of (i) the date on which the Company gives notice to AmerUs Group of the
complete termination of the use of the Marks by the Company and all Designated
Subsidiaries and (ii) subject to the automatic reduction in the Scope of the
License referred to in Section 4.6(b) hereof and subject to the renewal option
referred to in Section 4.6(c) hereof, the fifth anniversary of the License
Trigger Date.

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<PAGE>

(b) From and after the License Trigger Date, the Scope of the License
shall automatically be deemed amended (without any action by the parties hereto
or the parties to any Designated Subsidiary Agreement) to no longer license the
Marks hereunder or pursuant to any Designated Subsidiary Agreement, except to
use the "AmerUs" name solely in connection with the identification of the
Company's insurance products, but not for any other purpose or to use any of the
other Marks.

(c) If, prior to the occurrence of the fifth anniversary of the
License Trigger Date, the Company notifies AmerUs Group in writing of its desire
to extend the term of the License, then the License (as the scope of the License
shall have been automatically reduced pursuant to Section 4.6(b) hereof) shall
expire on the date specified in such written notice; PROVIDED that in no event
shall such specified date be later than the tenth anniversary of the License
Trigger Date.

(d) Notwithstanding the foregoing Sections of this Article IV or
anything else to the contrary contained in this Agreement, AmerUs Group shall
have the right to terminate the License at any time if AmerUs Group notifies the
Company in writing that, in the judgment of AmerUs Group, the Company or any
Designated Subsidiary has failed to comply with any term or provision of this
Article IV or of such Subsidiary's Designated Subsidiary Agreement, as the case
may be, and in either case such non-compliance is not cured to the satisfaction
of AmerUs Group within 30 days of the Company's receipt of such notice. Any
determination made by AmerUs Group pursuant to this Section 4.6(d) shall be made
in good faith and shall be binding and conclusive on the Company, its Designated
Subsidiaries and all other parties.

(e) Nothing contained in this Section 4.6 shall affect the
obligations of the Company to change its corporate name and to discontinue use
of the Marks and to cause its Subsidiaries to change their corporate names and
to discontinue use of the Marks in accordance with Section 4.9 hereof.

SECTION 4.7 FURTHER ASSURANCES; ATTORNEY-IN-FACT. Upon the
expiration or earlier termination of the License in accordance with the terms of
this Agreement, (a) the Company shall, and shall cause each of the Designated
Subsidiaries to, discontinue all uses of the Marks within 90 days after such
expiration or earlier termination; PROVIDED, HOWEVER, that AmerUs Group in its
sole and absolute discretion may reduce such time period within which the
Company and its Designated Subsidiaries shall discontinue any and all such uses
of the Marks if, in AmerUs Group's sole and absolute determination, continuation
of the use of the Marks would have an adverse effect upon the appearance of, the
reputation of or the goodwill associated with the Marks or upon any member of
the AmerUs Affiliated Group and

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(b) to the extent requested by AmerUs, the Company shall, and shall cause each
Designated Subsidiary to, promptly at its own expense take all legal and
administrative steps which may be required to protect AmerUs Group's ownership
of and goodwill symbolized by the Marks. The Company hereby appoints AmerUs
Group or its duly authorized representatives or attorneys as its agent and
attorney-in-fact to execute on its behalf and its name any documents which
AmerUs Group, in its good faith reasonable judgment, deems necessary in order to
terminate any rights of the Company or its Designated Subsidiaries, howsoever
created, anywhere in the world under or pursuant to this Agreement. This
provision shall not relieve the Company of its obligations to promptly execute
any such documents upon the request of AmerUs Group.

SECTION 4.8 TRADEMARK USAGE MARKING REQUIREMENTS AND QUALITY CONTROL.
(a) The Company shall, and shall cause the Designated Subsidiaries to, apply
appropriate statutory notice (I.E., the letter "R" in a circle) or such other
notice as may be required by foreign jurisdictions in connection with the use of
the Marks and will, to the extent reasonably practicable, disclose that use of
the Marks is pursuant to the License granted herein by AmerUs Group.

(b) The quality standards applied to the products and services
bearing the Marks, or offered in connection with the Marks shall be as specified
from time to time in writing by AmerUs Group. Notwithstanding any other
provision in this Article IV, all operations, products and services offered in
connection with the Marks by the Company and any Designated Subsidiary shall
conform in all material respects to such quality standards. To assure that the
applicable quality standards are maintained, AmerUs Group shall have the right
to periodically inspect and evaluate the products, operations and services of
the Company or any Designated Subsidiary bearing the Marks. Upon request, the
Company shall deliver to AmerUs Group samples of such use. If AmerUs Group
disapproves of the quality of such samples, the Company will have thirty (30)
days to cure the deficiency and the Company shall not conduct its operations or
sell its products or services under the Marks unless and until such deficiency
is cured to AmerUs Group's reasonable satisfaction.

SECTION 4.9 NAME CHANGES; DISCONTINUANCE OF USE OF CERTAIN MARKS.
Not later than the earlier to occur (a) the 30th day following the expiration or
earlier termination of the License pursuant to this Article IV and (b) the last
day of the six month period commencing on the License Trigger Date, the Company
shall, and shall cause each of its present and future direct and indirect
Subsidiaries the corporate, partnership, trade name or d/b/a of which includes
the word "AmerUs" or any variant or derivative thereof, to amend their
respective charter

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or other organizational documents to change each such entity's name to one which
does not include the word "AmerUs" or any variant or derivative thereof. Not
later than the last day of the six month period commencing on the License
Trigger Date, the Company shall, and shall cause each of the Designated
Subsidiaries to, discontinue all use of the Marks, except for the use of the
"AmerUs" name to the limited extent permitted by Section 4.6(b) hereof.

ARTICLE V

EQUITY PURCHASE RIGHTS

SECTION 5.1 EQUITY PURCHASE RIGHTS. So long as the members of the
AmerUs Affiliated Group own, in the aggregate, directly or indirectly, at least
50.1% of the voting power of the Outstanding Voting Stock, the members of the
AmerUs Affiliated Group shall have the equity purchase rights set forth in this
Section 5.1 (the "Equity Purchase Rights"); PROVIDED that the members of the
AmerUs Affiliated Group shall not be entitled to Equity Purchase rights to the
extent that the principal national securities exchange in the United States on
which the Common Stock is listed, if any, or the NASDAQ Stock Market Inc., in
the case any Common Stock is listed on the NASDAQ National Market, prohibits or
limits the granting by the Company of such Equity Purchase Rights or to the
extent that the purchase of Voting Stock by any member of the AmerUs Affiliated
Group would cause the Company to be a member of an "affiliated group," as
defined in Section 1504(a) of the Internal Revenue Code, which includes AMHC or
AmerUs Group.

As soon as practicable after determining to issue Equity Purchase
Shares, but in any event at least five Business Days prior to the issuance of
Equity Purchase Shares to any Person other than to a member of the AmerUs
Affiliated Group (and other than Equity Purchase Shares (i) described in clause
(x) of Section 3.1(vi) hereof, (ii) if the Company then has outstanding Public
Company Stock, issued under dividend reinvestment plans which offer Voting Stock
to securityholders at a discount from Average Market Price (as defined below) no
greater than is then customary for public corporation, (iii) issued pursuant to
the Transactions or (iv) issued in mergers, acquisitions and exchange offers),
the Company shall notify AMHC in writing of such proposed sale (which notice
shall specify, to the extent practicable, the purchase price for, and terms and
conditions of, such Equity Purchase Shares) and shall offer to sell to AMHC
(which offer may be assigned by AMHC to another member of the AmerUs Affiliated
Group) at the purchase price (net of any underwriting discounts or commissions),
if any, to be paid by the transferee(s) of such Equity Purchase Shares an amount
of Equity Purchase Shares determined as provided below. Immediately after the
amount of Equity Purchase Shares to be sold to other Persons

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is known to the Company, it shall notify AMHC (or such assignee) of such amount.
If such offer is accepted in writing within five Business Days after the notice
of such proposed sale (or such longer period as is necessary for the members of
the AmerUs Affiliated Group to obtain regulatory approvals), the Company shall
sell to such member of the AmerUs Affiliated Group an amount of Equity Purchase
Shares (the "Equity Purchase Share Amount") equal to the product of (A) the
quotient of (x) the number of shares of Voting Stock owned by the members of the
AmerUs Affiliated Group, in the aggregate, immediately prior to the issuance of
the Equity Purchase Shares by (y) the aggregate number of shares of Outstanding
Voting Stock owned by Persons other than by members of the AmerUs Affiliated
Group immediately prior to the issuance of the Equity Purchase Shares,
multiplied by (B) the aggregate number of Equity Purchase Shares being issued by
the Company to Persons other than to members of the AmerUs Affiliated Group
rounded up to the nearest whole Equity Purchase Share. If, at the time of the
determination of any Equity Purchase Share Amount, any other Person has
preemptive or other equity purchase rights similar to the Equity Purchase
Rights, such Equity Purchase Share Amount shall be recalculated to take into
account the amount of Voting Stock to be sold to such Persons, rounding up such
Equity Purchase Share Amount to the nearest whole Equity Purchase Share. If the
Company determines in good faith that, in light of the advice of an investment
banking firm advising it or of its other financial advisors, it must consummate
the issuance and sale of the Equity Purchase Shares prior to the members of the
AmerUs Affiliated Group having obtained the necessary regulatory approvals, the
Company shall notify AMHC in writing of such determination and shall then be
free so to consummate such issuance and sale without the members of the AmerUs
Affiliated Group having the right then to purchase its proportionate share of
such Equity Purchase Shares; PROVIDED, HOWEVER, that in such event the members
of the AmerUs Affiliated Group shall have the right to purchase from the
Company, within 60 Business Days (or such longer period (up to two years) as is
necessary for the members of the AmerUs Affiliated Group to obtain regulatory
approvals) Voting Stock in an amount equal to the amount of Voting Stock it
would have received had it been able to purchase (and, in the case of Equity
Purchase Shares other than Voting Stock, securities exercisable or exchangeable
for or convertible into Voting Stock) the Equity Purchase Shares offered to it
pursuant to this Section 5.1, at a per share purchase price equal to the lower
of (i) the sum of the purchase price (net of any underwriting discounts or
commissions), if any, paid by the transferee(s) plus the exercise price, if any,
of such Equity Purchase Shares, or (ii) the Average Market Price per share of
Voting Stock and, if there is no Average Market Price, the Fair Market Value per
share of Voting Stock, in each case, at the time of purchase by the members of
the AmerUs Affiliated Group.

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The purchase and sale of any Equity Purchase Shares pursuant to this
Section 5.1 shall take place at 9:00 a.m. on the latest of (i) the fifth
Business Day following the acceptance of such offer, (ii) the Business Day on
which such Equity Purchase Shares are issued to Persons other than the members
of the AmerUs Affiliated Group and (iii) the fifth Business Day following the
expiration of any required governmental or other regulatory waiting periods or
the obtaining of any required governmental or other regulatory consents or
approvals, at the offices of AMHC indicated in Section 11.1 hereof, or at such
other time and place in Des Moines, Iowa as AMHC and the Company shall agree.
At the time of purchase, the Company shall deliver to AMHC (or such assignee)
certificates registered in the name of the appropriate members of the AmerUs
Affiliated Group representing the shares purchased and the members of the AmerUs
Affiliated Group shall transfer to the Company the purchase price in United
States dollars by bank check or wire transfer of immediately available funds, as
specified by the Company, to an account designated by the Company not less than
five Business Days prior to the date of purchase. The Company and the members
of the AmerUs Affiliated Group will use their best efforts to comply as soon as
practicable with all federal and state laws and regulations and stock exchange
listing requirements applicable to any purchase and sale of securities under
this Section 5.1.

As used herein, "Average Market Price" of any security on any date
means the average of the daily closing prices for the 10 consecutive trading
days selected by the Company commencing not less than 20 days nor more than 30
trading days before the day in question. The closing price for each day shall
be the last reported sales price regular way or, in case no such reported sale
takes place on such day, the average of the reported closing bid and asked
prices regular way, in either case on the New York Stock Exchange, Inc. or, if
such security is not listed or admitted to trading on such Exchange, on the
principal national securities exchange on which such security is listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the National Association of Securities Dealers, Inc.
Automated Quotations National Market System or, if such security is not listed
or admitted to trading on any national securities exchange or quoted on such
National Market System, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
selected from time to time by the Company for that purpose. For the purpose of
this definition, the term "trading day" shall mean each Monday, Tuesday,
Wednesday, Thursday and Friday, other than any day on which securities are not
traded on such exchange or in such market.

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ARTICLE VI

FINANCIAL AND OTHER INFORMATION

SECTION 6.1 OWNERSHIP THRESHOLD. The Company agrees that, during any
period in which the members of the AmerUs Affiliated Group own, in the
aggregate, at least 50.1 percent of the voting power of the Outstanding Voting
Stock:

(a) MAINTENANCE OF BOOKS AND RECORDS. The Company shall, and
shall cause each of its consolidated subsidiaries to, (i) make and
keep books, records and accounts, which, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the
assets of the Company and such Subsidiaries and (ii) devise and
maintain a system of internal accounting controls sufficient to
provide reasonable assurances that: (w) transactions are executed in
accordance with management's general or specific authorization, (x)
transactions are recorded as necessary (1) to permit preparation of
financial statements in conformity with GAP or any other criteria
applicable to such statements and (2) to maintain accountability for
assets, and (y) access to assets is permitted only in accordance with
management's general or specific authorization.

(b) INFORMATION. With reasonable promptness, the Company shall
deliver to AMHC such financial and other information and data with
respect to the Company and its Subsidiaries and their business,
properties, financial position, results of operations and prospects as
from time to time may be reasonably requested by AMHC.

SECTION 6.2 AMHC ANNUAL STATEMENTS. In connection with any AmerUs
Affiliated Group member's preparation of its audited annual financial statements
and its annual reports (collectively the "AMHC Annual Statements"), during any
period in which the members of the AmerUs Affiliated Group own, in the
aggregate, at least 50.1% of the voting power of the Outstanding Voting Stock of
the Company, the Company agrees as follows:

(a) COORDINATION OF AUDITORS' OPINIONS. The Company will use
its best efforts to enable its independent certified public
accountants (the "Company Auditors") to complete their audit such that
they will date their opinion on the Company's audited annual financial
statements (the "Company Annual Financial Statements") on the same
date that AMHC independent certified public accountants (the "AMHC
Auditors") date their opinion on the AMHC Annual Statements, and to

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enable AMHC to meet its timetable for the printing, filing and public
dissemination of the AMHC Annual Statements.

(b) COOPERATION. Each of AMHC and the Company will provide to
the other party on a timely basis all information that such other
party or any of its subsidiaries reasonably requires to meet its
schedule for the preparation, printing, filing, and public
dissemination of its annual and quarterly statutory statements, its
audited annual financial statements, its Annual Reports to
Shareholders or Members, its annual, quarterly and current reports
under the Exchange Act, and any of its registration statements,
prospectuses and other filings made with the SEC (collectively, the
"Filings"). In this respect, AMHC or the Company, as the case may be,
will provide all required financial information with respect to it and
its consolidated subsidiaries to the other party's auditors and
management in a sufficient and reasonable time and in sufficient
detail to permit such auditors to take all steps and perform all
review necessary to provide sufficient assistance to such auditors
with respect to information to be included or contained in the
Filings, such assistance to such auditors to be in conformity with
current and past practices.

(c) ACCESS TO PERSONNEL AND WORKING PAPERS. The Company will
authorize the Company Auditors to make available to the AMHC Auditors
both the personnel who performed or are performing the annual audit of
the Company and, consistent with customary professional practice and
courtesy of such auditors with respect to the furnishing of work
papers, work papers related to the annual audit of the Company, in all
cases within a reasonable time after the Company Auditor's opinion
date, so that the AMHC Auditors are able to perform the procedures
they consider necessary to take responsibility for the work of the
Company Auditors as it relates to the AMHC Auditors' report on the
AMHC Annual Statements, all within sufficient time to enable AMHC to
meet its timetable for the printing, filing and public dissemination
of the AMHC Annual Statements.

SECTION 6.3 CONFIDENTIALITY. All information provided by the Company
pursuant to this Article VI will, except if the purpose for which such
information is furnished to AMHC pursuant to this Agreement contemplates such
disclosure and except for disclosure to the other members of the AmerUs
Affiliated Group by AMHC be kept confidential by AMHC and the other members of
the AmerUs Affiliated Group, and AMHC and the other members of the AmerUs
Affiliated Group will not disclose any such information in

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any manner whatsoever, until such information is disclosed by the Company or
otherwise becomes generally available to the public, except as such disclosure
may be required by law, rule or regulation. Any information furnished to AMHC
by the Company pursuant to Sections 6.1(b) and 6.2(c) hereof shall be used
solely for financial reporting, planning, control and record keeping purposes of
the members of the AmerUs Affiliated Group.

ARTICLE VII

REGISTRATION RIGHTS

SECTION 7.1 PIGGYBACK REGISTRATIONS.

(a) RIGHT TO PIGGYBACK. Whenever the Company proposes to register
any of its Common Stock (or securities convertible into or exchangeable or
exercisable for Common Stock) under the Securities Act for its own account or
the account of any shareholder of the Company (other than an initial public
offering of the Company's Common Stock, offerings pursuant to employee benefit
plans, or noncash offerings in connection with a proposed acquisition or merger,
exchange offer, recapitalization or similar transaction) and the registration
form to be used may be used for the registration of Registrable Shares (a
"Piggyback Registration"), the Company will give prompt written notice to AMHC
and to all other holders of Common Stock having similar registration rights, of
its intention to effect such a registration and, subject to Section 7.1(b)
hereof, shall include in such registration all Registrable Shares with respect
to which the Company has received written request for inclusion therein within
15 days after receipt of the Company's notice.

(b) PRIORITY. If a registration pursuant to this Section 7.1
involves an Underwritten Offering and the managing underwriter advises the
Company in good faith that in its opinion the number of securities requested to
be included in such registration exceeds the number which can be sold in such
offering without having an adverse effect on such offering, including the price
at which such securities can be sold, then the Company will be required to
include in such registration the maximum number of shares that such underwriter
advises can be so sold, allocated

(i) if such registration was initiated by the Company, (x)
first, to the securities the Company proposes to sell, (y) second,
among the shares of Common Stock requested to be included in such
registration by members of the AmerUs Affiliated Group and any other
stockholder of the Company owning shares of Common Stock eligible for
registration, PRO RATA, on the basis of the number of shares of Common
Stock each holder requests be included in such registration, and

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(z) third, among other securities, if any, requested and otherwise eligible
to be included in such registration; and

(ii) if such registration was initiated by a securityholder of
the Company, (w) first, among the shares of Common Stock requested to
be included in such registration by such requesting securityholder,
(x) second, among the shares of Common Stock requested to be included
in such registration by any member of AmerUs Affiliated Group, (y)
third, among the shares of Common Stock requested to be included in
such registration by any other shareholder of the Company owning
shares of Common Stock eligible for such registration, pro rata, on
the basis of the number of shares of Common Stock each holder requests
be included in such registration, and (z) fourth, among other
securities, if any, requested and otherwise eligible to be included in
such registration (including securities to be sold for the account of
the Company).

(c) In the case of a registration initiated by the Company, nothing
contained herein shall prohibit the Company from determining, at any time, not
to file a registration statement or, if filed, to withdraw such registration or
terminate or abandon the registration related thereto, without prejudice,
however, to the rights of the members of the AmerUs Affiliated Group to
immediately request a registration pursuant to Section 7.2 hereof.

SECTION 7.2 REQUESTED REGISTRATION.

(a) RIGHT TO REQUEST REGISTRATION. At any time after the date
hereof, upon the written request of any member of the AmerUs Affiliated Group
requesting that the Company effect the registration under the Securities Act of
all or part of the Registrable Shares (a "Demand Registration"), the Company
shall use its best efforts to effect, as expeditiously as possible, the
registration under the Securities Act of such number of Registrable Shares
requested to be so registered; PROVIDED that the Company shall not be required
to file a registration statement pursuant to this Section 7.2(a), (i) within a
period of six months after the effective date of any other registration
statement of the Company requested hereunder or pursuant to which any member of
the AmerUs Affiliated Group shall have been given an opportunity to participate
pursuant to Section 7.1 hereof, (ii) relating to an offering on a delayed or
continuous basis pursuant to Rule 415 (or any successor rule to similar effect)
promulgated under the Securities Act if the Company is not, at the time,
eligible to register shares of Common Stock on Form S-3 (or a successor form)
(iii) with respect to any offering which would cause the Company to violate the
provisions of

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Section 521A.14 of the Iowa insurance laws or any successor provision; or
(iv) with respect to any offering that is not reasonably expected to yield gross
proceeds of at least $20 million; PROVIDED that in the event that the members of
the AmerUs Affiliated Group, collectively, do not own at the time of such
request such amount of Registrable Shares of the kind and type being so
registered that would be reasonably expected to yield gross proceeds of at least
$20 million, then the restriction contained in clause (iii) of this Section
7.2(a) shall be disregarded with respect to such registration.

Promptly after receipt of any such request for Demand Registration,
the Company shall give written notice of such request to all other holders of
Common Stock having rights to have their shares included in such registration
and shall, subject to the provisions of Section 7.2(c) hereof, include in such
registration all such Registrable Shares with respect to which each member of
the AmerUs Affiliated Group or such other shareholder has requested to be so
registered.

(b) EFFECTIVE REGISTRATION. A registration requested pursuant to
this Section 7.2 shall not be deemed to have been effected (and, therefore, not
requested for purposes of Section 7.2(a) above) (i) unless the registration
statement relating thereto has become effective under the Securities Act, (ii)
if after it has become effective such registration is interfered with by any
stop order, injunction or other order or requirement of the SEC or other
governmental agency or court for any reason other than a misrepresentation or an
omission by any member of the AmerUs Affiliated Group and, as a result thereof,
the Registrable Shares requested to be registered cannot be completely
distributed in accordance with the plan of distribution, (iii) if the conditions
to closing specified in the purchase agreement or underwriting agreement entered
into in connection with such registration are not satisfied or waived other than
by reason of some act or omission by any member of the AmerUs Affiliated Group
or (iv) if, pursuant to Section 7.2(c) hereof, less than all of the Registrable
Shares requested be registered were actually registered.

(c) PRIORITY. If a requested registration pursuant to this Section
7.2 involves an underwritten offering and the managing underwriter shall advise
the Company that in its opinion the number of securities requested to be
included

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in such registration exceeds the number which can be sold in such offering
without having adverse effect on such offering, including the price at which
such securities can be sold, then the Company will be required to include in
such registration the maximum number of shares that such underwriter advises can
be so sold, allocated (i) first, to Registrable Shares requested by the members
of the AmerUs Affiliated Group to be included in such registration, (ii) second,
among all shares of Common Stock requested to be included in such registration
by any other shareholder of the Company owning shares of Common Stock eligible
for such registration, PRO RATA on the basis of the number of shares of Common
Stock requested to be included in such registration and (iii) third, among other
securities, if any, requested and otherwise eligible to be included in such
registration (including securities to be sold for the account of the Company).

(d) PREEMPTION OF DEMAND REGISTRATION. Notwithstanding the
foregoing, if the Board of Directors of the Company determines in its good faith
judgment, (i) after consultation with a nationally recognized investment banking
firm, that there will be an adverse effect on a then contemplated public
offering of the Company's securities, (ii) that the disclosures that would be
required to be made by the Company in connection with such registration would be
materially harmful to the Company because of transactions then being considered
by, or other events then concerning, the Company or (iii) that registration at
the time would require the inclusion of pro forma or other information, which
requirement the Company is reasonably unable to comply with, then the Company
may defer the filing (but not the preparation) of the registration statement
which is required to effect any registration pursuant to this Section 7.2 for a
reasonable period of time, but not in excess of 90 calendar days (or any longer
period agreed to by the requesting holders of Registrable Shares), PROVIDED that
at all times the Company is in good faith using all reasonable efforts to file
the registration statement as soon as practicable.

(e) OTHER REGISTRATION RIGHTS. The Company shall not grant to any
Person the right, other than as set forth herein and except to employees and
directors of the Company, to request the Company to register any securities of
the Company except such rights as are not more favorable than the rights granted
to the members of the AmerUs Affiliated Group herein, without the written
consent of AMHC.

SECTION 7.3 REGISTRATION PROCEDURES. If and whenever the Company is
required to use its best efforts to effect or cause the registration of any
Registrable Shares under the Securities Act as provided in this Agreement, the
Company shall:

(a) prepare and file with the SEC as expeditiously as possible
but in no event later than 90 days after receipt of a request for
registration with respect to such Registrable Shares, a registration
statement on any form for which the Company then qualifies or which
counsel for the Company shall deem appropriate, which form shall be
available for the sale of the Registrable Shares in accordance with
the intended methods of distribution thereof, and use its best efforts
to cause such registration statement to

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become effective as soon as practicable; PROVIDED that before filing with
the SEC a registration statement or prospectus or any amendments or
supplements thereto, including any documents incorporated by reference
therein, the Company shall (x) furnish to AMHC and to one counsel selected
by AMHC (or by AMHC and holders of other securities covered by such
registration statement, but in no event to more than one firm of attorneys
for all such selling securityholders) copies of all such documents proposed
to be filed, which documents shall be subject to the review of AMHC and
such counsel, and (y) notify AMHC of any stop order issued or threatened by
the SEC and take all reasonable actions required to prevent the entry of
such stop order or to remove it if entered;

(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period of not less than 180 days or such
shorter period which shall terminate when all Registrable Shares
covered by such registration statement have been sold (but not before
the expiration of the 90-day period referred to in Section 4(3) of the
Securities Act and Rule 174, or any successor provision, if
applicable), and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in
such registration statement;

(c) furnish, without charge, to AMHC and each underwriter, if
any, such number of copies of such registration statement, each
amendment and supplement thereto (including one conformed copy to AMHC
and one signed copy to each managing underwriter and in each case
including all exhibits thereto), and the prospectus included in such
registration statement (including each preliminary prospectus), in
conformity with the requirements of the Securities Act, and such other
documents as AMHC may reasonably request in order to facilitate the
disposition of the Registrable Shares registered thereunder;

(d) use its best efforts to register or qualify such Registrable
Shares covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the selling
holders, and the managing underwriter, if any, reasonably requests and
do any and all other acts and things which may be

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reasonably necessary or advisable to enable the selling holders and each
underwriter, if any, to consummate the disposition in such jurisdictions of
the Registrable Shares registered thereunder; PROVIDED that the Company
shall not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for
this paragraph (d), (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction;

(e) use its best efforts to cause the Registrable Shares covered
by such registration statement to be registered with or approved by
such insurance regulatory authorities as may be necessary by virtue of
the business and operations of the Company to enable the selling
holders to consummate the disposition of Registrable Shares registered
thereunder;

(f) immediately notify the managing underwriter, if any, AMHC
and the selling holders at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the happening
of any event which comes to the Company's attention if as a result of
such event the prospectus included in such registration statement
contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Company shall promptly
prepare and furnish to the selling holders a supplement or amendment
to such prospectus so that as thereafter delivered, such prospectus
shall not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading; PROVIDED, HOWEVER, that if
the Company determines in good faith that the disclosure that would be
required to be made by the Company would be materially harmful to the
Company because of transactions then being considered by, or other
events then concerning, the Company, or a supplement or amendment to
such prospectus at such time would require the inclusion of pro forma
or other information, which requirement the Company is reasonably
unable to comply with, then the Company may defer, for a reasonable
period of time not to exceed 90 days, furnishing to the selling
holders a supplement or amendment to such prospectus; PROVIDED
further, that at all times the Company is in good faith using all
reasonable efforts to file such amendment as soon as practicable;

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(g) use its best efforts to cause all such securities being
registered to be listed on each securities exchange on which similar
securities issued by the Company are then listed or any Interdealer
quotation system (including the NASDAQ National Market), and enter
into such customary agreements including a listing application and
indemnification agreement in customary form, PROVIDED that the
applicable listing requirements are satisfied, and to provide a
transfer agent and register for such Registrable Shares covered by
such registration statement no later than the effective date of such
registration statement;

(h) make available for inspection by AMHC and any holder of
securities covered by such registration statement, any underwriter
participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by
such persons (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company
and its subsidiaries (collectively, "Records"), if any, as shall be
reasonably necessary to enable them to exercise their due diligence
responsibilities, and cause the Company's and its Subsidiaries'
officers, directors and employees to supply all information and
respond to all inquiries reasonably requested by any such Inspector in
connection with such registration statement. Notwithstanding the
foregoing, the Company shall have no obligation to disclose any
Records to the Inspectors in the event the Company determines that
such disclosure is reasonable likely to have an adverse effect on the
Company's ability to assert the existence of an attorney-client
privilege with respect thereto;

(i) if requested, use its best efforts to obtain a "cold
comfort" letter from the Company's independent public accountants in
customary form and covering such matters of the type customarily
covered by "cold comfort" letters;

(j) make available senior management personnel to participate
in, and cause them to cooperate with the underwriters in connection
with, "road show" and other customary marketing activities, including
"one-on-one" meetings with prospective purchasers of the Registrable
Shares;

(k) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders, as soon as

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reasonably practicable, an earning statement covering a period of at least
12 months, beginning with the first month after the effective date of the
registration statement (as the term "effective date" is defined in Rule
158(c) under the Securities Act), which earning statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
and

(l) if requested to do so by the selling holders, use its best
efforts to create a depositary arrangement whereby depositary shares
representing fractional shares of Registrable Shares will be issued
and to cause to be prepared and to execute customary documentation
with respect to such depositary arrangement and such other
documentation that the selling holders may reasonably request in order
to facilitate the disposition of the depositary shares created
thereunder (including, but not limited to, engaging a depositary and
preparing and executing a depositary agreement).

It shall be a condition precedent to the obligation of the Company to
take any action pursuant to this Agreement in respect of the Registrable Shares
which are to be registered at the request of any member of the AmerUs Affiliated
Group shall furnish to the Company such information regarding the securities
held by any member of the AmerUs Affiliated Group and the intended method of
disposition thereof as the Company shall reasonably request and as shall be
required in connection with the action taken by the Company.

SECTION 7.4 RESTRICTION ON DISPOSITION OF REGISTRABLE SHARES. AMHC
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 7.3(f) hereof, AMHC shall, and shall
cause each member of the AmerUs Affiliated Group to, discontinue disposition of
Registrable Shares pursuant to the registration statement covering such
Registrable Shares until receipt of the copies of the supplemented or amended
prospectus contemplated by Section 7.3(f) hereof, or until otherwise notified by
the Company, and, if so directed by the Company, AMHC shall, and shall cause
each member of the AmerUs Affiliated Group to, deliver to the Company (at the
Company's expense) all copies (including, without limitation, any and all
drafts), other than permanent file copies, then in their possession, of the
prospectus covering such Registrable Shares at the time of receipt of such
notice. In the event the Company shall give any such notice, the period
mentioned in Section 7.3(b) hereof shall be extended by the greater of (x) three
months or (y) the number of days during the period from and including the date
of the giving of such notice pursuant to Section 7.3(f) hereof to and including
the date when the selling holders shall have received the copies of the

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supplemented or amended prospectus contemplated by Section 7.3(f) hereof.

SECTION 7.5 SELECTION OF UNDERWRITERS. If any offering pursuant to a
registration requested pursuant to Section 7.2 hereof is to be an Underwritten
Offering, AMHC shall have the right to select a managing underwriter or
underwriters to administer the offering.

SECTION 7.6 REGISTRATION EXPENSES. The Company shall pay for the
following costs and expenses with respect to its compliance with its obligations
in connection with a registration hereunder, including, but not limited to: (i)
all registration and filing fees, (ii) fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registrable Shares),
(iii) printing expenses, (iv) internal expenses (including without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), (v) the fees and expenses incurred in connection with the
listing of the Registrable Shares on any national securities exchange or
interdealer quotation system, (vi) the reasonable fees and disbursements of
counsel for the Company and customary fees and expenses for independent
certified public accountants retained by the Company (including the expenses of
any comfort letters or costs associated with the delivery by independent
certified public accountants of a comfort letter or comfort letters), (vii) the
fees and expenses of any registrar and transfer agent or any depositary, (viii)
the underwriting fees, discounts and commissions applicable to any Common Stock
sold for the account of the Company and (ix) the cost of preparing all
documentation in connection therewith. Except as otherwise provided in clause
(viii) of this Section 7.6, the Company shall have no obligation to pay any
underwriting fees, discounts, commissions or expenses attributable to the sale
of Registrable Shares, including, without limitation, the fees and expenses of
any underwriters and such underwriters' counsel. The Company shall have no
obligation to pay the legal fees and disbursements of counsel for AMHC or any
other shareholder selling Registrable Shares. Notwithstanding the foregoing,
the Company and AmerUs Group shall share pro rata (based on the number of shares
sold by the Company and AmerUs Group, respectively) in all of the costs and
expenses of the IPO S-1 (including the Subscription Offering).

SECTION 7.7 CONVERSION OF OTHER SECURITIES. If any holder of
Registrable Shares offers any options, rights, warrants or other securities
issued by it or any other person that are offered with, convertible into or
exercisable or exchangeable for any Registrable Shares, the Registrable Shares
underlying such options, rights, warrants or other securities shall be eligible
for registration pursuant to Sections 7.1 and 7.2 hereof.

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SECTION 7.8 RULE 144. If and for so long as the Company is subject
to the reporting requirements of the Exchange Act, the Company shall take such
measures and file such information, documents and reports as shall be required
by the SEC as a condition to the availability of Rule 144 (or any successor
provision) under the Securities Act.

SECTION 7.9 TRANSFER OF REGISTRATION RIGHTS.

(a) any member of the AmerUs Affiliated Group may transfer all or any
portion of its rights under this Article VII and Article VIII hereof to any
transferee (each, a "transferee") of Registrable Shares provided that such
transferee is (i) a member of the AmerUs Affiliated Group or (ii) an
institutional Accredited Investor (as defined under Rule 501(a) of the
Securities Act) permitted to acquire such Registrable Shares under applicable
law. Any transfer of registration rights pursuant to this Section 7.9 shall be
effective upon receipt by the Company of written notice from such member of the
AmerUs Affiliated Group stating the name and address of any transferee and
identifying the amount of Registrable Shares with respect to which the rights
under this Article VII (and Article VIII hereof) are being transferred and the
nature of the rights so transferred. In connection with any such transfer, the
term "AMHC" or "member of the AmerUs Affiliated Group" as used in this Agreement
shall, where appropriate to assign such rights and obligations to such
transferee, be deemed to refer to the transferee holder of such Registrable
Shares. Any member of the AmerUs Affiliated Group and such transferees may
exercise the registration rights hereunder in such proportion as they shall
agree among themselves.

(b) After such transfer, each member of the AmerUs Affiliated Group
shall retain its rights under this Agreement with respect to all other
Registrable Shares owned by such member of the AmerUs Affiliated Group.

(c) Upon the request of any member of the AmerUs Affiliated Group,
the Company shall execute a Registration Rights Agreement with such transferee
or a proposed transferee substantially similar to the applicable sections of
this Agreement.

ARTICLE VIII

BUSINESS AND REGISTRATION STATEMENT INDEMNIFICATION

SECTION 8.1 GENERAL CROSS INDEMNIFICATION.

(a) AMHC agrees to indemnify and hold harmless the Company and its
Subsidiaries and each of the officers, directors,

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employees and agents of the Company and its Subsidiaries against any and all
cost and expenses arising out of third party claims (including, without
limitation, attorneys' fees, interest, penalties and cost of investigation or
preparation of defense), judgments, fines, losses, claims, damages, liabilities,
demands, assessments and amounts paid in settlement (collectively, "Losses"), in
each case, based on, arising out of, resulting from or in connection with any
claim, action, cause of action, suit, proceeding or investigation, whether
civil, criminal, administrative, investigative or other (collectively,
"Actions"), based on, arising out of, pertaining to or in connection with (i)
any breach by AMHC of this Agreement, any Designated Subsidiary Agreement or any
other agreement between the Company and its subsidiaries and any member of the
AmerUs Affiliated Group, (ii) the ownership or the operation of the assets or
properties (other than capital stock of the Company) and the operation or
conduct of the business, of the members of the AmerUs Affiliated Group, whether
before, on or after the date hereof, (iii) any third party claims that AmerUs
Group or another member of the AmerUs Affiliated Group, as the case may be, does
not have the right to use or license the Marks in the United States in
connection with the products and services within the Scope of the License and
(iv) any untrue statement or alleged untrue statement of a material fact
contained in any Filing of the Company or any Subsidiary of the Company, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only with respect to financial information, if any, provided by any member of
the AmerUs Affiliated Group in writing to the Company or any Subsidiary of the
Company expressly for use in such Filing of the Company or Subsidiary of the
Company.

(b) The Company agrees to indemnify and hold harmless each member of
the AmerUs Affiliated Group and each of the officers, directors, employees and
agents of each member of the AmerUs Affiliated Group against any and all Losses,
in each case, based on, arising out of, resulting from or in connection with any
Actions, based on, arising out of, pertaining to or in connection with (i) any
activities, action or inaction on the part of the Company or any of its
Subsidiaries or any of their officers, directors, employees, affiliates (other
than a member of the AmerUs Affiliated Group), fiduciaries or agents, (ii) any
breach by the Company of this Agreement or any breach by any Subsidiary of the
Company of any Designated Subsidiary Agreement or any other agreement between
the Company or any of its Subsidiaries and any member of the AmerUs Affiliated
Group, (iii) the ownership or the operation of the assets or properties, and the
operation of the assets or properties, and the operation or conduct of the
business, of the Company or any Subsidiary of the Company, whether before, on or
after the date hereof, (iv) any use of the Marks by the Company and its
Subsidiaries, (v) any Keepwell and (vi) any untrue statement or alleged untrue

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statement of a material fact contained in any Filing of any member of the AmerUs
Affiliated Group, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with respect to information, if any, provided
by the Company or a Subsidiary of the Company in writing to any member of the
AmerUs Affiliated Group expressly for use in such Filing and which is, or would
be required to be, included in any Filing of the Company or any of its
Subsidiaries.

(c) The indemnity agreement contained in this Section 8.1 shall be
applicable whether or not any Action or the facts or transactions giving rise to
such Action arose prior to, on or subsequent to the date of this Agreement.

SECTION 8.2 REGISTRATION STATEMENT INDEMNIFICATION.

(a) The Company agrees to indemnify and hold harmless each member of
the AmerUs Affiliated Group, each Person to whom registration rights shall have
been transferred pursuant to Section 7.9 hereof and each person, if any, who
controls any of the foregoing within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (collectively, the "Registration
Indemnitees") from and against any and all Losses arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement or Prospectus, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such Losses arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission which has been
made therein or omitted therefrom in reliance upon and in conformity with (i)
information relating to a Registration Indemnitee furnished in writing to the
Company by or on behalf of such Registration Indemnitee expressly for use in the
Registration Statement or Prospectus, (ii) financial information, if any,
provided by a Registration Indemnitee in writing to the Company expressly for
use in the Registration Statement or Prospectus; and (iii) information relating
to any underwriter furnished in writing to the Company by or on behalf of such
underwriter expressly for use in the Registration Statement or Prospectus.

(b) Each Registration Indemnitee agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its officers who sign
any Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
to the same extent as the foregoing indemnity from the Company to each
Registration Indemnitee, but only with respect to (i) information relating to
such Registration Indemnitee furnished in writing to the Company by or on behalf
of such Registration

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Indemnitee expressly for use in the Registration Indemnitee expressly for use in
the Registration Statement or Prospectus and (ii) financial information, if any,
provided by such Registration Indemnitee in writing to the Company expressly for
use in the Registration Statement or Prospectus. For purposes of this Section
8.2(b), any information relating to any underwriter that is contained in a
Registration Statement or Prospectus shall not be deemed to be information
relating to a Registration Indemnitee. If any Action shall be brought against
the Company, any of its directors, any such officer, or any such controlling
person based on any Registration Statement or Prospectus and in respect of which
indemnity may be sought against a Registration Indemnitee pursuant to this
paragraph (b), such Registration Indemnity shall have the rights and duties
given to the Company by Section 8.4 hereof (except that if the Company shall
have assumed the defense thereof, such Registration Indemnitee shall not be
required to do so, but may employ separate counsel therein and participate in
the defense thereof, but the fees and expenses of such counsel shall be at such
Registration Indemnitee's expense), and the Company, its directors, any such
officer, and any such controlling person shall have the rights and duties given
to such Registration Indemnitee by Section 8.4 hereof.

SECTION 8.3 CONTRIBUTION. (a) If the indemnification provided for in
this Article VIII is unavailable to an indemnified party under Section 8.2
hereof in respect of any Losses referred to therein, then an indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such Losses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the applicable Registration Indemnitee on the other
hand from the offering of the securities covered by such Registration Statement
and Prospectus or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the applicable Registration Indemnitee
on the other in connection with the statements or omissions that resulted in
such Losses, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and a Registration
Indemnitee on the other shall be deemed to be in the same proportion as the
total net proceeds from the applicable securities offering (before deducting
expenses) received by such Registration Indemnitee. The relative fault of the
Company on the one hand and the applicable Registration Indemnitee on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or by such Registration Indemnitee on the other hand and the
parties' relative intent, knowledge,

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access to information and opportunity to correct or prevent such statement or
omission.

(b) the Company and each Registration Indemnitee agree that it would
not be just and equitable if contribution pursuant to this Section 8.3 were
determined by a PRO RATA allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(a) above. The amount paid or payable by an indemnified party as a result of
the Losses referred to in paragraph (a) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
any claim or defending any such Action. Notwithstanding the provisions of this
Section 8.3, a Registration Indemnitee shall not be required to contribute any
amount in excess of the amount by which the proceeds to such Registration
Indemnitee exceeds the amount of any damages which such Registration Indemnitee
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

SECTION 8.4 PROCEDURE. If any Action shall be brought against a
Registration Indemnitee or any other person entitled to indemnification pursuant
to this Article VIII (collectively with the Registration Indemnitees, the
"Indemnitees") in respect of which indemnity may be sought against the Company,
such Indemnitee shall promptly notify the Company, and the Company shall assume
the defense thereof, including the employment of counsel and payment of all fees
and expenses. Such Indemnitee shall have the right to employ separate counsel
in any such action, suit or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such person unless (i) the Company has agreed in writing to pay such fees and
expenses, (ii) the Company has failed to assume the defense and employ counsel,
or (iii) the named parties to an Action (including any impleaded parties)
include both an Indemnitee and the Company and such Indemnitee shall have been
advised by its counsel that representation of such indemnified party and the
Company by the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the Company shall not have the right to assume the defense of such
Action on behalf of such Indemnitee). It is understood, however, that the
Company shall, in connection with any one such Action or separate but
substantially similar or related Actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of only one separate

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firm of attorneys (in addition to any local counsel) at any time for all such
indemnified persons not having actual or potential differing interests among
themselves, and that all such fees and expenses shall be reimbursed as they are
incurred. The Company shall not be liable for any settlement of any such Action
effected without its written consent, but if settled with such written consent,
or if there be a final judgment of the plaintiff in any such Action, the Company
agrees to indemnify and hold harmless each Indemnitee, to the extent provided in
the preceding paragraph, from and against any Losses by reason of such
settlement or judgment.

SECTION 8.5 OTHER MATTERS. (a) No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened Action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such Action.

(b) Any Losses for which an indemnified party is entitled to
indemnification or contribution under this Article VIII shall be paid by the
indemnifying party to the indemnified party as such Losses are incurred. The
indemnity and contribution agreements contained in this Article VIII shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Indemnitee, the Company, its directors
or officers, or any person controlling the Company, and (iii) any termination of
this Agreement.

(c) The parties hereto shall, and shall cause their respective
subsidiaries to, cooperate with each other in a reasonable manner with respect
to access to unprivileged information and similar matters in connection with any
Action. The provisions of this Article VIII are for the benefit of, and are
intended to created third party beneficiary rights in favor of, each of the
indemnified parties referred to herein.

SECTION 8.6 INFRINGEMENT. (a) The Company shall, and shall cause
each Designated Subsidiary to, promptly notify AmerUs Group in writing of any
threatened or actual unauthorized use, infringement or dilution by third parties
of the Marks which may come to such party's attention. AmerUs Group shall have
the sole initial right to determine whether or not any action shall be taken
against any such unauthorized use, infringement or dilution. AmerUs Group shall
promptly notify the Company of its determination and shall briefly describe the
action, if any, which it shall take. In the event the AmerUs Group initiates
litigation against a third party, AmerUs Group shall choose the attorneys,
control the litigation, pay the litigation expenses,

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and retain any damages recovered as a result of any judgement in favor of AmerUs
Group.

(b) In the event that AmerUs Group takes no action to stop such
alleged infringement within 30 days following notice by the Company of such
infringement, then the Company may bring an action with respect to such alleged
unauthorized use, infringement or dilution, provided that the Company obtains
AmerUs Group's prior written consent (which consent shall not be unreasonably
withheld), and AmerUs Group shall join in such suit if necessary to maintain the
Company's standing. Any recovery from a suit brought by the Company shall be
divided between the parties in proportion to the expenses each incurred in
connection with the prosecution of such suit. The Company shall not settle any
such action without the prior written consent of AmerUs Group such consent shall
not be unreasonably withheld.

(c) AmerUs Group and the Company agree to provide reasonable
cooperation to each other in any litigation or other action taken to enforce the
Marks.

ARTICLE IX

OTHER PROVISIONS

SECTION 9.1 KEEPWELL PAYMENTS. The company agrees to reimburse any
member of the AmerUs Affiliated Group who has provided a Keepwell for any and
all amounts paid or payable (including all fees, costs and expenses incurred) by
such member of the AmerUs Affiliated Group in connection with performance by
such member of its obligations under any Keepwell.

SECTION 9.2 BUSINESS RELATIONSHIP. The parties hereto agree that all
arrangements in existence as of the date hereof pursuant to which the Company or
any of its Subsidiaries utilize the distribution channels of any member of the
AmerUs Affiliated Group for the distribution of the Company or its Subsidiaries'
insurance products shall continue until the Trigger Date on such payment terms
that are consistent with the past cost allocation practices of the member of the
AmerUs Affiliated Group and on such other terms as are consistent with past
practices (including utilizing such distribution channels on an exclusive basis
to the extent that such distribution channels are utilized on an exclusive basis
as of the date hereof).

SECTION 9.3 MANAGEMENT SERVICES. Until the Trigger Date, the Company
shall provide to the AmerUs Affiliated Group the following management services
and assistance, or cause such services to be rendered on behalf of the Company
by any Subsidiary, by such personnel as are deemed appropriate: (i) general
management services and support, including the

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services of executive employees of the Company or any Subsidiary;
(ii) assistance and participation in matters relating to operations, strategy,
and business planning; and (iii) as requested, furnish reports to the board of
directors of AMHC or AmerUs Group with respect to aspects of the business and
affairs of the AmerUs Affiliated Group. In performing its duties hereunder, the
Company shall be subject to the continuing and exclusive authority of the board
of directors of AMHC or the board of directors of the member of the AmerUs
Affiliated Group for which services are being performed and shall act
consistently with and subject to the provisions of the Articles of Incorporation
and By-Laws of AMHC and the other members of the AmerUs Affiliated Group. AMHC
and AmerUs Group acknowledge that the provision by the Company of such
management services and assistance will save the AmerUs Affiliated Group
significant administrative expenses and involve considerable time and effort of
many of the officers and employees of the Company and its Subsidiaries. In
consideration of such services to the AmerUs Affiliated Group, AmerUs Group
agrees to pay with respect to each 12-month period the sum of $2,000,000 per
year. The sum shall be payable in equal installments quarterly in advance on
the first business day of each calendar quarter; PROVIDED, HOWEVER, that if the
provisions of Article IX become effective during a calendar quarter, the payment
for such quarter shall be pro-rated based on the number of days remaining in
such quarter and shall be paid within fifteen business days of such effective
date.

SECTION 9.4 MISCELLANEOUS SERVICES. Until the Trigger Date and only
to extent not otherwise provided for in this Agreement, and the Reimbursement
Agreements (i) AMHC may, or may cause another member of the AmerUs Affiliated
Group to continue to provide to the Company and any Subsidiary of the Company
(ii) the Company may, or may cause one or more of its Subsidiaries to continue
to provide to the members of the AmerUs Affiliated Group, any and all
administrative services which have been, consistent with past practices,
provided by any member of the AmerUs Affiliated Group to any Subsidiary of the
Company and vice-versa. If such services shall be reimbursed by the user of
such services for all costs, fees and expenses incurred by such provider,
including reasonable allocations of salaries (including benefits) of personnel
and overhead on a basis that is consistent with the past cost allocation
practices of the members of the AmerUs Affiliated Group; PROVIDED that the
provision of such services shall only be required to the extent that they are
consistent with appropriate standards of business conduct.

SECTION 9.5 REGULATORY APPROVALS. To the extent that any regulatory
or other approvals shall be necessary to effect and perform any of the
provisions of this Agreement, the parties hereto shall use their best efforts to
obtain such approvals prior to the date upon which not obtaining such approvals
would result in a default of such party's obligations hereunder. If

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such approvals have not been obtained by such date, then each party hereto shall
not be deemed to be in default of its obligations hereunder so long as such
party is in good faith diligently using their best efforts to obtain such
approvals as soon as practicable. To the extent that any such regulatory
approval is not obtained within a reasonable period of time after such date,
AMHC and the Company shall in good faith use their best efforts to find and
effect an alternative means to achieve the same or substantially the same result
as that contemplated by such provision.

ARTICLE X

DISPUTE RESOLUTION

SECTION 10.1 NEGOTIATION.

(a) In the event of any dispute, controversy or claim arising out of
or relating to this Agreement or the breach, termination or validity thereof (a
"Dispute"), upon the written notice ("Notice") of either party hereto ("Party"),
the Parties shall attempt in good faith to negotiate a resolution of the
Dispute; PROVIDED, however, that this Article X shall not apply to any dispute,
controversy or claim arising out of or relating to Article IV of this Agreement
or the breach, termination or validity thereof and AMHC shall have the right to
pursue equitable remedies in a court of equity to the extent permitted by
Section 11.4 hereof.

(b) If the Parties are unable to resolve the Dispute within 30 days
after the receipt of the Notice, then either Party may submit the Dispute to
arbitration in accordance with Section 10.2 hereof as the exclusive means to
resolve the Dispute.

SECTION 10.2 ARBITRATION.

(a) Any Dispute not resolved pursuant to Section 10.1 hereof shall,
at the request of either Party, be finally settled by arbitration administered
by the American Arbitration Association (the "AAA") under its Commercial
Arbitration Rules then in effect the (the "Rules") except as modified herein.
The arbitration shall be held in Des Moines Iowa.

(b) There shall be three arbitrators of whom each Party shall select
one within 15 days of respondent's receipt of claimant's demand for arbitration.
The two party-appointed arbitrators shall select a third arbitrator to serve as
Chair of the tribunal within 15 days of the section of the second arbitrator.
If any arbitrator has not been appointed within the time limits specified
herein, such appointment shall be made by

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the AAA in accordance with the Rules upon the written request of either Party
within 15 days of such request.

(d) The arbitral tribunal shall permit prehearing discovery that is
relevant to the subject matter of the Dispute taking into account the Parties'
desire that the arbitration be conducted expeditiously and cost effectively.
All discovery shall be completed within 60 days of the appointment of the third
arbitrator.

(e) The award shall be final and binding and shall be the sole and
exclusive remedy between the Parties regarding any claims, counterclaims,
issues, or accounting presented to the arbitral tribunal. The arbitration shall
be governed by the United States Arbitration Act, 9 U.S.C. Section 1-16, and
judgment upon any award may be entered in any court having jurisdiction.

(f) The Parties will bear equally all fees, costs, disbursements and
other expenses of the arbitration, and each Party shall be solely responsible
for all fees, costs, disbursements and other expenses incurred in the
preparation and prosecution of their own case; PROVIDED that in the event that a
Party fails to comply with the orders or decision of the arbitral tribunal, then
such noncomplying party shall be liable for all costs and expenses (including,
without limitation, attorneys fees) incurred by the other Party in its effort to
obtain either an order to compel, or an enforcement of an award, from a court of
competent jurisdiction.

(g) The arbitral tribunal shall be authorized in its discretion to
grant pre-award and post-award interest at commercial rates. The arbitral
tribunal shall have no authority to award punitive damages or any other damages
not measured by the prevailing parties' actual damages.

(h) All notices by one party to the other in connection with the
arbitration shall be in accordance with the provisions of Section 11.1 hereof,
except that all notices made pursuant to this Article X must be made by personal
delivery or overnight courier. This agreement to arbitrate shall be binding
upon the successors and permitted assigns of each Party. This Agreement and the
rights and obligations of the Parties shall remain in full force and effect
pending the award in any arbitration proceeding hereunder.

SECTION 10.3 CONFIDENTIALITY. Except to the extent necessary in
connection with a court challenge to the arbitration contemplated by Section
10.2 hereof, information concerning (i) the existence of negotiations pursuant
to Section 10.1 hereof,

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(ii) the existence of an arbitration pursuant to Section 10.2 hereof, (iii) any
documentary or other evidence given by a Party or a witness in the arbitration
or (iv) the arbitration award may not be disclosed by the tribunal
administrator, the arbitrators, any Party or its counsel to any person or entity
not connected with the proceeding unless required to do so by law or by a court
or competent regulatory body, and then only to the extent of disclosing what is
legally required.

ARTICLE XI

MISCELLANEOUS

SECTION 11.1 NOTICES. All notices and other communications provided
for hereunder shall be dated and in writing and shall be deemed to have been
given (a) when delivered, if delivered personally, sent by confirmed telecopy or
sent by registered or certified mail, return receipt requested, postage prepaid,
(b) on the next business day if sent by overnight courier and (c) when received
if delivered otherwise. Such notices shall be delivered to the address set
forth below, or to such other address as a party shall have furnished to the
other party in accordance with this Section.

If to AMHC or any other member of the AmerUs Affiliated Group, to:

American Mutual Holding Company
418 6th Avenue
Des Moines, Iowa 50306
Attention: General Counsel

If to the Company, to:

AmerUs Life Holdings, Inc.
418 6th Avenue
Des Moines, Iowa 50306
Attention: General Counsel

SECTION 11.2 BINDING NATURE OF AGREEMENT. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto or their successors in interest, except as expressly otherwise provided
herein.

SECTION 11.3 DESCRIPTIVE HEADINGS. The descriptive headings of the
several articles and sections of this Agreement are inserted for reference only
and shall not limit or otherwise effect the meaning hereof.

SECTION 11.4 REMEDIES. Without limiting the rights of each party
hereto to pursue any and all other legal and equitable

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rights available to such party for the other parties' failure to perform their
obligations under this Agreement, the parties hereto acknowledge and agree that
the remedy at law for any failure to perform their obligations hereunder would
be inadequate and that each of them, respectively, shall be entitled to specific
performance, injunctive relief or other equitable remedies in the event of any
such failure. Without limiting the generality of the foregoing, the Company
acknowledges and agrees that (a) its covenants and obligations hereunder are
special, unique and relate to matters of extraordinary importance to AMHC, that
in the event the Company fails to perform, observe or discharge any of its
obligations under this agreement AMHC will be irreparably harmed and that no
remedy at law will provide adequate relief to AMHC and (b) AMHC shall be
entitled to a temporary restraining order and temporary and permanent injunctive
and other equitable relief in case of any failure by the Company to perform,
observe or discharge any of its covenants or obligations hereunder and without
the necessity of proving actual damages. The remedies provided herein shall be
cumulative and shall not preclude assertion by any party hereto of any other
rights or the seeking of any other remedies, either legal or equitable, against
any other party hereto.

SECTION 11.5 GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with, and the rights and duties of the parties shall be
governed by, the laws of the State of Iowa, without regard to the principles of
conflicts of the law.

SECTION 11.6 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same instrument.

SECTION 11.7 SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal, or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.

SECTION 11.8 AMENDMENT AND MODIFICATION. Subject to applicable law,
this Agreement may be amended, modified or supplemented only by written
agreement executed by the parties hereto.

SECTION 11.9 ENTIRE AGREEMENT. This Agreement, including any
schedules or exhibits annexed hereto, embodies the entire agreement and
understanding of the parties hereto in

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respect of the transactions contemplated by this Agreement. There are no
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.

SECTION 11.10 NO ASSIGNMENT. Except as otherwise provided in Section
7.9 hereof, neither this Agreement nor any of the rights, interests or
obligations of any party hereto may be assigned by such party without the prior
written consent of the other parties; PROVIDED, HOWEVER, that AMHC or AmerUs
Group may assign all or part of its rights or obligating hereunder to one or
more other member of the AmerUs Affiliated Group without the prior consent of
the Company.

SECTION 11.11 RECAPITALIZATION, DILUTION ADJUSTMENTS, ETC. In the
event that any capital stock or other securities are issued in respect of, in
exchange for, or in substitution of, any shares of Common Stock by reason of any
reorganization, recapitalization, reclassification, merger, consolidation, spin-
off, partial or complete liquidation, stock dividend, split-up, sale of assets,
distribution to Shareholders or combination of the shares of Common Stock or any
demutualization or conversion to stock form of AMHC then, in each such case,
appropriate adjustments shall be made to as to fairly and equitably preserve, as
far as practicable, the original rights and obligations of the parties hereto
under this Agreement.

SECTION 11.12 FURTHER ASSURANCES. Each party hereto shall, on notice
of request from any other party hereto, take such further action not
specifically required hereby at the expense of the requesting party, as the
requesting party may reasonably request for the implementation of the
transactions contemplated hereby.

SECTION 11.13 NO THIRD PARTY BENEFICIARIES. Except as expressly set
forth herein, nothing in this Agreement shall convey any rights upon any person
or entity which is not a party or a permitted assignee of a party to this
Agreement.

SECTION 11.14 EFFECTIVENESS OF CERTAIN PROVISIONS. The provisions of
Article III, IV, V, VI, VII, VIII and IX shall not become effective until the
date that AmerUs Life becomes a wholly-owned Subsidiary of the Company.

-40-

<PAGE>

IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the partner hereto as of the date
list above written.

AMERICAN MUTUAL HOLDING COMPANY

By /s/ Sam C. Kalainov
-------------------------------
AMERUS GROUP CO.

By /s/ Sam C. Kalainov
-------------------------------
AMERUS LIFE HOLDINGS, INC.

By /s/ Roger K. Brooks
-------------------------------

-41-

<PAGE>

EXHIBIT A

FEDERAL REGISTRATION MARKS
--------------------------

MARK CLASS(ES AP FILED REG. STATUS
- ---- -------- -------- -----------

AMERUS 37 10/21/94 Pending

AMERUS 36 & 42 10/21/94 Pending

AMERUS (Stylized Letters) 36 & 42 01/17/95 Pending

AMERUS (Stylized Letters) 36 11/16/95 Pending

AMERUS (Stylized Letters) 37 01/17/95 Pending

AMERUS (Stylized Letters in Color) 36 & 42 02/03/95 Pending

AMERUS (Stylized Letters in Color) 36 02/03/95 Pending

AMERUS INSURANCE 36 05/16/95 Pending

AMERUS LIFE None 12/07/95 Pending

AMERUS LIFE 36 10/20/95 Pending

AMERUS LIFE INSURANCE 36 10/20/95 Pending

AMERUS LIFE INSURANCE COMPANY 36 10/20/95 Pending

-42-

<PAGE>

JOINT VENTURE AGREEMENT

THIS JOINT VENTURE AGREEMENT (the "Agreement") is made and entered into as
of March 8th, 1996 by and between AMERITAS LIFE INSURANCE CORP., a Nebraska
mutual life insurance company ("ALIC"), and AMERICAN MUTUAL LIFE INSURANCE
COMPANY, an Iowa mutual life insurance company ("AML").

R E C I T A L S:

A. ALIC has heretofore created a wholly owned subsidiary known as
Ameritas Variable Life Insurance Company ("AVLIC"), principally engaged in the
business of selling variable life and annuity insurance throughout the United
States.

B. In order to facilitate the sale of variable life and annuity insurance
by AVLIC, ALIC has heretofore created another wholly owned subsidiary known as
Ameritas Investment Corp. ("AIC"), a registered broker-dealer.

C. AML is now engaged in part in the business of selling various forms of
life and annuity insurance, including fixed annuities, throughout the United
States.

D. AML has developed a significant distribution force of approximately
1,800 agents, some of whom are career agents and some of whom are personal
producing general agents, as those terms are generally understood in the
insurance industry.

E. AML has investigated various methods of entering the variable life and
annuity insurance business.

F. ALIC has investigated various methods of expanding its distribution of
variable life and annuity insurance.

G. ALIC and AML have now determined that it is in their mutual best
interests to enter into a joint venture (the "Joint Venture") whereby ALIC and
AML shall combine their various resources, including the variable life and
annuity products currently sold by AVLIC and the distribution force currently
appointed by AML, to sell the variable life and annuity insurance issued by
AVLIC as well as the fixed annuities currently sold by AML.

H. The parties have determined to form a joint venture holding company
into which ALIC will transfer all of its interest in AVLIC and AIC. AML will,
in addition to making a capital investment as set forth herein, use all
reasonable efforts to encourage its distribution force to accept appointment
with AVLIC. Thereafter both parties will direct their sales efforts with
respect to variable life and annuity and fixed annuity products, except as
otherwise stated herein, only through AVLIC.

<PAGE>

I. Each of the parties recognize that a minimum of five years will be
required to permit the Joint Venture to realize the benefits contemplated by
this Agreement, and therefore each of the parties commit, on the terms set forth
herein, to remain part of the Joint Venture and devote all reasonable efforts to
the success of the Joint Venture during the first five years, in order that the
Joint Venture is able to operate in an efficient and effective manner, in
accordance with good business practices and the terms and conditions of this
Agreement.

J. Each of the parties to this Agreement recognize that each party is
committing to the Joint Venture valuable resources and business which, once
committed to the Joint Venture, cannot easily be separated from the Joint
Venture without great difficulty and incalculable detriment to each party.

K. The parties commit to treat each other fairly and honestly in
connection with the governance of the Joint Venture as provided hereinafter to
the end that the business of the Joint Venture is promoted to the fullest
extent.

A G R E E M E N T S:

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises set forth in this Agreement and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

ARTICLE I

DEFINITIONS

The capitalized terms used in this Agreement shall have the meanings set
forth below. Other terms are also defined in the text of the Agreement. Unless
the context otherwise requires, such capitalized terms shall include the
singular and plural and the conjunctive and disjunctive forms of the terms
defined.

1.1 "Acceptance Date" shall mean the date on which an offer to
purchase Shares pursuant to an Auction as provided in Section 2.6(b) hereof or
to sell or purchase Shares pursuant to a Unilateral Auction as provided in
Section 2.6(e) hereof is accepted or deemed accepted.

1.2 "Accounting Firm" shall mean Ernst & Young.

1.3 "Adjusted Value" shall mean Value, adjusted to exclude Extraordinary
Items.

1.4 "Affiliate" shall mean any Person that directly, or indirectly through
one or more intermediaries, controls, is

2
<PAGE>

controlled by or is under common control with the Person specified.

1.5 "Aggregate Investment" shall mean, as of the Exercise Date for any
portion of the Option, the sum of (x) the Investment plus a charge equal to 5%
per annum on such amount from the Closing Date to the Exercise Date, plus (y)
the amount of any capital contribution(s) (not including any exercise price paid
in respect of any portion of the Option) made by AML after the Closing Date,
plus a charge equal to 5% per annum on each such amount(s) from the date of each
such contribution, respectively, to the Exercise Date.

1.6 "Agreement" shall mean this Agreement, together with the exhibits
attached hereto, the Disclosure Schedule and the Contracts and other documents
to be executed and delivered respectively by ALIC and/or AML pursuant hereto.

1.7 "AIC" shall mean Ameritas Investment Corp., a Nebraska corporation.

1.8 "AIC Statements" shall mean the audited GAAP Statements of AIC for the
year ended on December 31, 1994, and quarterly GAAP Statements of AIC for each
of the first three quarters of 1995 (and notes relating thereto).

1.9 "ALIC" shall mean Ameritas Life Insurance Corp., a Nebraska life
insurance company.

1.10 "AML" shall mean American Mutual Life Insurance Company, an Iowa
mutual life insurance company.

1.11 "AML Baseline Weighted Premium" shall be $5.5 million.

1.12 "AML Parent" shall mean any Person which at any time becomes the
direct record owner of all the issued and outstanding capital stock of AML and
is in turn a Subsidiary of a mutual insurance holding company authorized and
created under Iowa law.

1.13 "AML Sources" shall mean all members of AML's Distribution Force as of
the Closing Date together with any other Persons who are at any time thereafter
(a) appointed as insurance agents or otherwise employed by AML or any Affiliate
thereof (other than Holding Company and its Subsidiaries, except as provided in
clause (b) hereof) or (b) recruited or introduced by AML or any Affiliate
thereof (other than Holding Company and its Subsidiaries) to AVLIC or any other
Subsidiary of Holding Company.

1.14 "AML Weighted Premium" shall mean, for any calendar month, the sum of
the amounts, for all Product Categories, calculated by multiplying (x) the First
Year Earned Premium of AVLIC from AML Sources during the 12-month period ending
on the

3
<PAGE>

last day of such month (or, if shorter, the period elapsed from the Closing Date
to the last day of such month), for each such Product Category, by (y) the
Product Factor applicable to such Product Category; PROVIDED, HOWEVER, that the
amount calculated in respect of the "Fixed Annuities" Product Category by
multiplying the amounts described in clauses (x) and (y) above shall be
adjusted, if necessary, so that such amount comprises not more than 25% of the
AML Weighted Premium for the period as to which the foregoing definition is
applied.

1.15 "Annual Statement" shall mean the annual SAP Statement of AVLIC and/or
the separate accounts thereof filed with or submitted to the insurance
regulatory authority in the state in which it is domiciled on forms prescribed
or permitted by such authority for the year ended on December 31, 1994.

1.16 "Assets and Properties" shall mean all assets or properties of every
kind, nature, character and description, whether real, personal or mixed,
whether tangible or intangible, whether absolute, accrued, contingent, fixed or
otherwise, and wherever situated, as now operated, owned or leased by a
specified Person, including without limitation cash, cash equivalents,
securities, accounts and notes receivable, real estate, equipment, furniture,
fixtures, insurance or annuities in force, goodwill and going-concern value.

1.17 "Auction" shall mean the process described in Section 2.6(b) hereof.

1.18 "Auction Notice" shall mean a written communication given by a
Noticing Party to the other party to this Agreement in order to initiate an
Auction as provided in Section 2.6(b) hereof.

1.19 "AVLIC" shall mean Ameritas Variable Life Insurance Company, a
Nebraska life insurance company.

1.20 "AVLIC or AIC Representative" shall mean any present or former
officer, director, employee, agent, consultant or other similar representative
of AVLIC, AIC or any predecessor thereof.

1.21 "AVLIC GAAP Statements" shall mean the audited GAAP Statements of
AVLIC for the year ended on December 31, 1994, and quarterly GAAP Statements of
AVLIC for each of the first three quarters of 1995 (and notes relating thereto).

1.22 "AVLIC SAP Statements" shall mean the Annual Statement and the
Quarterly Statements.

1.23 "Benefit Plans" shall mean all employee pension benefit plans, all
employee welfare benefit plans, all stock bonus, stock ownership, stock option,
stock purchase, stock appreciation rights, phantom stock and other stock plans
(whether qualified or

4
<PAGE>

non-qualified), and all other pension, welfare, severance, retirement, bonus,
deferred compensation, incentive compensation, insurance (whether life, accident
and health or other and whether key man, group, workers' compensation or other),
profit sharing, disability, thrift, day care, legal services, leave of absence,
layoff and supplemental or excess benefit plans, severance benefit programs, and
all other benefit Contracts, arrangements or procedures having the effect of a
plan, in each case existing on or before the Closing Date under which AVLIC or
AIC is or may hereafter become obligated in any manner (including without
limitation obligations to make contributions or other payments) and which cover
some or all of the AVLIC or AIC Representatives; PROVIDED, HOWEVER, that such
term shall not include (a) routine employment policies and procedures developed
and applied in the ordinary course of business and consistent with past
practice, including without limitation sick leave, vacation, and (b) directors
and officers liability insurance.

1.24 "Books and Records" shall mean all accounting, financial reporting,
Tax, business, marketing, corporate and other files, documents, instruments,
papers, books and records of a specified Person, including without limitation
financial statements, budgets, projections, ledgers, journals, deeds, titles,
policies, manuals, minute books, stock certificates and books, stock transfer
ledgers, Contracts, franchises, permits, agency lists, policyholder lists,
supplier lists, reports, computer files, retrieval programs, operating data or
plans, and environmental studies or plans.

1.25 "Business Day" shall mean a day other than Saturday, Sunday or any day
on which the principal commercial banks located in New York, New York are
authorized or obligated to close.

1.26 "Business or Condition" shall mean the organization, existence,
authority, capitalization, business, licenses, condition (financial or
otherwise), cash flow, management, sales force, solvency, prospects, SAP results
of operations, insurance or annuities in force, SAP capital and surplus,
Liabilities, GAAP results of operation, GAAP income, GAAP book value, net
capital ratios or Assets and Properties of a specified Person.

1.27 "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act, as amended.

1.28 "Closing" shall mean the closing of the transactions contemplated by
this Agreement as provided in Section 2.9 hereof.

1.29 "Closing Confirmation" shall mean the certificate, substantially in
the form attached hereto as Exhibit A, required to be executed and delivered by
each of ALIC and AML pursuant to Section 2.9(g) hereof which confirms that all
conditions to Closing have been satisfied or waived and that the Closing has
occurred as of the Closing Date specified therein.

5
<PAGE>

1.30 "Closing Date" shall mean (a) the later of (i) the fifth Business Day
next following or (ii) the last Business Day of the month which includes, the
date upon which the last of the orders or approvals described in Sections 5.1,
5.2, 6.1 and 6.2 hereof has been obtained, including without limitation the
approvals under all applicable insurance holding company Laws, or (b) such other
date as AML and ALIC may mutually agree upon in writing.

1.31 "Closing Value" shall mean the sum of the Adjusted Value of AVLIC and
the Adjusted Value of AIC as of (i) December 31, 1995, if the Closing Date
occurs before April 2, 1996, or (ii) the last day of the last full calendar
quarter expiring prior to the Closing Date, if the Closing Date occurs on or
after April 2, 1996.

1.32 "Closing Value Financial Statements" shall mean (i) if the Closing
Date occurs before April 2, 1996, the audited 1995 year-end GAAP Statements of
AVLIC and AIC; and (ii) if the Closing Date occurs on or after April 2, 1996,
the unaudited Verified quarterly GAAP Statements of AVLIC and AIC, for the
calendar quarter described in clause (ii) of Section 1.30 hereof, together with
the audited 1995 year-end GAAP Statements of AVLIC and AIC.

1.33 "Code" shall mean the Internal Revenue Code of 1986, as amended
(including without limitation any successor code), and the rules and regulations
promulgated thereunder.

1.34 "Commission" shall mean the Securities and Exchange Commission or any
successor thereto.

1.35 "Contract" shall mean any agreement, lease, sublease, license,
sublicense, promissory note, evidence of indebtedness, insurance policy, annuity
or other commitment, whether written or oral.

1.36 "Corporate Transaction" shall mean any bona fide merger,
consolidation, acquisition of a substantial portion of the capital stock of
another Person, acquisition of a substantial portion of the business or assets
of another Person, or other similar transaction made or entered into by ALIC or
AML or any Affiliate of either (other than Holding Company and its
Subsidiaries), provided that such Person is engaged in the business of
insurance, has its own Distribution Force or other distribution system and was
not previously an Affiliate of such party.

1.37 "Damages" shall mean any and all monetary damages, liabilities, fines,
fees, penalties, interest obligations, deficiencies, losses and expenses,
including without limitation punitive, treble or other exemplary or extra
contractual damages, amounts paid in settlement, interest, court costs, costs of

6
<PAGE>

investigation, fees and expenses of attorneys, accountants, actuaries and other
experts, and other expenses of litigation or of any claim, default or
assessment.

1.38 "Difference" shall mean 34/66 of the difference between the Closing
Value and the 12/31/94 Value.

1.39 "Disclosure Schedule" shall mean the bound record dated as of the date
of this Agreement, as amended, supplemented and revised in accordance with this
Agreement, furnished by ALIC to AML, and containing all lists, descriptions,
exceptions and other information and materials as are required to be included
therein pursuant to this Agreement.

1.40 "Disputed Issue" shall mean a question or decision which is not
expressly resolved by reference to an express provision of (i) this Agreement,
the Service Agreements, the Guaranties, as modified or amended from time to
time, or any other written Contract between ALIC and AML, or among ALIC, AML,
AVLIC, AIC or any of them, or (ii) any then effective plan of operation, annual
budget or business plan for Holding Company, AVLIC or AIC which has been
approved by a vote of its board of directors.

1.41 "Distribution Force" shall mean those Persons appointed by a life
insurance company to distribute life insurance and annuity products, including
without limitation career agents and personal producing general agents, as those
terms are generally understood in the life insurance industry; PROVIDED,
HOWEVER, that this term shall not include those individuals described above who
are appointed by such life insurance company in connection with and
substantially contemporaneous with a Corporate Transaction occurring after the
Closing Date, or thereafter, if the party engaging in such Corporate Transaction
maintains a separate Distribution Force of the other party to such Corporate
Transaction.

1.42 "Environmental Laws" shall mean any federal, state or local law,
statute, ordinance or regulation pertaining to Hazardous Substances, health,
industrial hygiene or the environmental condition on or under any property
including, without limitation, CERCLA and the Toxic Substance Control Act, and
the rules and regulations thereunder.

1.43 "Exercise Date" shall mean the date on or as of which any portion of
the Option is exercised.

1.44 "Exercise Period" shall have the meaning ascribed to it in Section
2.5(c).

1.45 "Extraordinary Items" shall mean transactions, changes or effects
which are reflected on the Closing Value Financial Statements, the AVLIC GAAP
Statements and/or the AIC Statements

7
<PAGE>

and (a) which are not in the ordinary course of business; (b) which are the
result of changes in accounting principles or estimation methods and procedures
from those employed in preparation of the closing balances on such GAAP
Statements for the year ended December 31, 1994; or (c) which are the result of
realized or unrealized gains or losses on assets held by AVLIC (other than in
its separate accounts) or AIC arising from interest rate fluctuations.

1.46 "First Year Earned Premiums" shall mean (a) all first year insurance
and annuity premiums actually received in respect of any insurance or annuity
Contracts issued by a specified Person during any calendar month (except to the
extent included in a prior month pursuant to clause (b) hereof) together with
(b) all first year premiums, if any, prospectively due and payable under such
Contracts for the ensuing eleven-month period.

1.47 "Fixed Annuities" shall mean annuity Contracts which are backed by the
general account of the issuing life insurance company, but shall not include the
annuities listed on Exhibit B hereto.

1.48 "GAAP" shall mean generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.

1.49 "GAAP Statements" shall mean any and all annual, quarterly or other
interim financial statements prepared by or on behalf of a Person (and notes
related thereto), which include a balance sheet and a statement of income (and,
without limitation, any net capital reports filed with the NASD), whether
audited or unaudited, which were prepared in accordance with GAAP and satisfy
the standards set forth in Section 3.13(a) hereof.

1.50 "Guaranty" shall mean (i) that certain Guarantee Agreement of ALIC
dated as of July 8, 1991, a copy of which is attached hereto as Exhibit C;
and/or (ii) the separate guaranty, dated as of the Closing Date, to be executed
by AML and delivered to AVLIC, substantially in the form attached hereto as
Exhibit D; and/or any guaranty which may be executed by any AML Parent pursuant
to Section 2.8(i) hereof.

1.51 "Guaranty Payment" shall mean a payment made by ALIC, AML or any AML
Parent of any amount under its respective Guaranty.

1.52 "Hazardous Substance" shall mean (i) any and all hazardous, toxic or
dangerous waste, substance, pollutant, contaminant, radiation or material
defined as such in (or deemed as such for purposes of) CERCLA, at the Closing
Date, or any other Environmental Law and (ii) any petroleum or petroleum-based
products.

8
<PAGE>

1.53 "Holding Company" shall mean AMAL Corporation, a Nebraska corporation
to be formed pursuant to Section 2.1 hereof.

1.54 "HSR Act" shall mean Section 7A of the Clayton Act (Title II of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976), as amended (including
without limitation any successor act), and the rules and regulations promulgated
thereunder.

1.55 "Initial Investment" shall mean $17.77 million in cash, which amount
shall be contributed by AML to Holding Company at the Closing as provided in
Section 2.1 hereof.

1.56 "Inside Director" shall mean a director of Holding Company, AVLIC or
AIC who is a full-time employee of ALIC, AML, Holding Company, AVLIC, AIC or any
Affiliate of any of the foregoing.

1.57 "Intercompany Liabilities" shall mean Liabilities between AVLIC or
AIC, on the one hand, and, on the other, ALIC or any other Affiliate of ALIC,
AVLIC or AIC or any officer or director of any of the foregoing or any Affiliate
or business venture (other than Holding Company and its Subsidiaries) in which
any of the foregoing have any material interest.

1.58 "Investment" shall mean the Initial Investment plus or minus the
Difference.

1.59 "Joint Venture" shall have the meaning ascribed to it in the Recitals
to this Agreement.

1.60 "JV Baseline Weighted Premium" shall mean the sum of the amounts, for
all Product Categories, calculated by multiplying (x) the First Year Earned
Premiums of AVLIC during 1995 in respect of Variable Products and the First Year
Earned Premiums of ALIC during 1995 in respect of Fixed Annuities by (y) the
Product Factor applicable to such Product Category.

1.61 "JV Weighted Premium" shall mean, for any month, the sum of the
amounts, for all Product Categories, calculated by multiplying (x) the First
Year Earned Premiums of AVLIC from all sources during the 12-month period ending
with the close of business on the last day of such month (or, if shorter, the
period elapsed from the Closing Date to the last day of such month), for each
such Product Category, by (y) the Product Factor applicable to such Product
Category.

1.62 "Knowledge of ALIC" shall mean the actual knowledge of any director,
officer, manager or supervisor of ALIC, AVLIC or AIC, or knowledge which should
have been obtained by any such individual in the normal course of performing the
duties attendant to his or her position.

9
<PAGE>

1.63 "Knowledge of AML" shall mean the actual knowledge of any director,
officer, manager or supervisor of AML, or knowledge which should have been
obtained by any such individual in the normal course of performing the duties
attendant to his or her position.

1.64 "Laws" shall mean all laws, statutes, ordinances, regulations and
other pronouncements having the effect of law of the United States of America or
any state, commonwealth, city, county, municipality, territory, protectorate,
possession, court, tribunal, agency, government, department, commission,
arbitrator, board, bureau or instrumentality thereof.

1.65 "Liabilities" shall mean all debts, obligations and other liabilities
of a Person, whether absolute, accrued, contingent, fixed or otherwise, and
whether due or to become due, which are recognized as liabilities in accordance
with SAP (other than "Interest Maintenance Reserves" and "Asset Valuation
Reserves") and/or GAAP.

1.66 "Lien" shall mean any mortgage, pledge, assessment, security interest,
lease, sublease, lien, adverse claim, levy, charge or other encumbrance of any
kind, or any conditional sale Contract, title retention Contract or other
Contract to give or to refrain from giving any of the foregoing other than
Permitted Encumbrances.

1.67 "Low Load Products" shall mean Variable Products which pay de minimis
or no direct first year or renewal sales commissions and which are marketed as
"low load" products within the meaning of applicable Laws and as commonly
understood in the insurance and/or securities industries.

1.68 "Major Issue" shall mean a question or decision which, alone or in the
aggregate with related questions or decisions, would have or would reasonably be
expected to have a financial impact of more than $1,000,000 on the operations,
finances, capitalization or strategic direction of Holding Company or any of its
Subsidiaries, other than as set forth in any plan of operation or annual budget
or business plan which has been approved by the board of directors of Holding
Company.

1.69 "Material Issue" shall mean a question or decision which, alone or in
the aggregate with related questions or decisions,

(a) would have or would reasonably be expected to have a financial
impact of more than $1,000,000 on the operations, finances,
capitalization or strategic direction of Holding Company or any
of its Subsidiaries, other than as set forth in any plan of
operation or annual budget or business plan

10
<PAGE>

which has been approved by the board of directors of Holding
Company;

(b) would have or would reasonably be expected to have a significant
impact on the Distribution Force of AVLIC or on any regulatory
approvals or insurance ratings of AVLIC;

(c) involves the marketing by Holding Company or its Subsidiaries of
a new product line or through a new method of distribution;

(d) would or might involve Holding Company, AVLIC, AIC or any other
Subsidiary in any potential violation of applicable Law that
would or would reasonably be expected to have a material adverse
effect on Holding Company or any Subsidiary thereof; or

(e) is a matter which the board of directors has been unable to
resolve as provided in Section 2.6(a).

Except as otherwise agreed in writing at the time the question or decision
arises, a Material Issue shall not occur in relation to:

(1) any action reasonably attendant to the day to day operation of
Holding Company or any Subsidiary thereof; or

(2) any matter which is expressly resolved by reference to an express
provision of

a) this Agreement, the Service Agreements, the Guaranties or
any other written Contract between ALIC and AML, as modified
or amended from time to time,

b) any then effective plan of operation, annual budget or
business plan for Holding Company, AVLIC or AIC which has
been approved by a vote of its board of directors, or

c) any applicable resolution of the board of directors of
Holding Company, AVLIC or AIC (or action of the executive
committee of AVLIC or AIC) which has not been withdrawn and
has not been the subject of a subsequent vote in which the
board of directors (or executive committee) was unable to
resolve such matter.

1.70 "NASD" shall mean the National Association of Securities Dealers, Inc.

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<PAGE>

1.71 "Notice of Election" shall mean the written notice given to the
Selling Party by the other party to this Agreement as provided in Section
2.8(a)(2)(b) hereof.

1.72 "Noticing Party" shall mean a party to this Agreement who gives an
Auction Notice to the other party to this Agreement.

1.73 "Offering Party" shall mean a party who receives a Unilateral Auction
Notice.

1.74 "Option" shall have the meaning ascribed to it in Section 2.5 hereof.

1.75 "Option Period" shall mean the five-year period which begins on the
day following the Closing Date and ends at 11:59 p.m. on the fifth anniversary
of the Closing Date.

1.76 "Option Ratio" shall mean, for any calendar month, the ratio of the JV
Weighted Premium for such month to the JV Baseline Weighted Premium.

1.77 "Other Party" shall mean a party who receives an Offering Party's
offer in connection with a Unilateral Auction as provided in Section 2.6 hereof.

1.78 "Outside Director" shall mean a director of Holding Company, AVLIC or
AIC who may be a director of ALIC or AML, but who is not a full-time employee of
ALIC, AML, Holding Company, AVLIC or AIC or any Affiliate of any of the
foregoing.

1.79 "Permitted Encumbrances" shall mean the following encumbrances: (i)
Liens for Taxes, either not yet due and payable or to the extent that nonpayment
thereof is permitted by the terms of this Agreement; (ii) pledges or deposits
securing obligations under worker's compensation, unemployment insurance, social
security or public liability laws or similar legislation; (iii) pledges or
deposits securing bids, tenders, Contracts (other than Contracts for the payment
of money) or leases to which ALIC or any of its Affiliates is a party as lessee
made in the ordinary course of business, (iv) deposits securing public or
statutory obligations of ALIC or any of its Affiliates; (v) workers',
mechanics', suppliers', carriers', warehousemen's or other similar liens arising
in the ordinary course of business and securing indebtedness aggregating not in
excess of $100,000 at any time outstanding, to the extent not yet due and
payable; (vi) deposits securing or in lieu of surety, appeal or customs bonds in
proceedings to which ALIC or any of its Affiliates is a party; (vii) pledges or
deposits effected by ALIC or any of its Affiliates as a condition to obtaining
or maintaining any license of such Person; (viii) any attachment or judgment
lien, unless the judgment it secures shall not, within 60 days after the entry
thereof, have been discharged or execution thereof stayed pending appeal, or
shall not have been discharged within 60 days after

12
<PAGE>

the expiration of any such stay; (ix) zoning restrictions, easements,
licenses or other restrictions on the use of real property or other minor
irregularities in title (including leasehold title) thereto, so long as the
same do not materially impair the use, value or marketability of such real
property, leases or leasehold estates; and (x) Liens under the provisions of
insurance policies and annuities in force and reinsurance and coinsurance
contracts in force.

1.80 "Person" shall mean any natural person, corporation, general
partnership, limited partnership, proprietorship, trust, union, association,
court, tribunal, agency, government, department, commission, self-regulatory
organization, arbitrator, board, bureau, instrumentality, or other entity,
enterprise, authority or business organization.

1.81 "Prime Rate" shall mean the highest prime rate or base rate of
interest publicly announced by any of Citibank, N.A., Chase Manhattan, N.A. or
Bank of America, N.A., or any successor to any of the foregoing.

1.82 "Product Categories" shall mean those types of insurance and annuity
products set forth in the definition of the term "Product Factor." These
categories are further defined to include the following premiums:

Variable annuities: Premiums paid in respect of all current and
future annuity contracts filed as Variable
Products by AVLIC and approved by the
Commission.

Variable life-repetitive: Premiums paid in respect of current and
future AVLIC life insurance contracts that
are Variable Products up to the premium
established and published by AVLIC as the
"target premium."

Variable life-dump ins: Premiums paid in respect of current and
future AVLIC life insurance contracts that
are Variable Products which are in excess of
the published "target premium."

Variable life-single premium: The single premium paid in respect of current
and future AVLIC single premium life
insurance Contracts that are Variable
Products.

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<PAGE>

Fixed annuities: Premiums paid in respect of Fixed Annuities
issued by AVLIC which are not filed with or
approved by the Commission.

1.83 "Product Factor" shall mean, for any Product Category, the percentage
set forth below:

Product Category Percentage
---------------- ----------
Variable annuities 1.8%
Variable life
--repetitive 35.0%
--dump ins 6.0%
--single premium 1.8%
Fixed annuities 1.5%

1.84 "Proposed Purchaser" shall mean a Third Party which is not an
Affiliate to whom ALIC or AML proposes to sell, assign or otherwise transfer its
Shares in a bona fide transaction pursuant to Section 2.8(a)(2) hereof.

1.85 "Quarterly Statement" shall mean the quarterly SAP Statements of AVLIC
and/or the separate accounts thereof filed with or submitted to the insurance
regulatory authority in the state in which it is domiciled on forms prescribed
or permitted by such authority for each of the first three quarters of 1995.

1.86 "Real Estate" shall mean any real property, fixtures and interests
therein, including without limitation leasehold interests.

1.87 "Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, leaching, dumping or other disposal,
or any escaping or migrating, in any amount into or onto the air, ground or
surface water, land or other parts of the environment, however caused, not
permitted by or in compliance with Environmental Laws.

1.88 "SAP" shall mean the accounting practices required or permitted by the
National Association of Insurance Commissioners and the insurance regulatory
authority in the state in which AVLIC is domiciled, consistently applied
throughout the specified period and in the immediately prior comparable period.

1.89 "SAP Statements" shall mean any and all annual, quarterly or other
interim financial statements prepared by or on behalf of a Person and/or its
separate accounts (and notes related thereto), which include a balance sheet and
a statement of income, whether audited or unaudited, which were prepared in
accordance with SAP and satisfy the standards set forth in Section 3.12 hereof.

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<PAGE>

1.90 "Selling Party" shall mean the party to this Agreement who proposes to
sell, assign or otherwise transfer its Shares to a Proposed Purchaser in a bona
fide transaction pursuant to Section 2.8(a)(2) hereof.

1.91 "Service Agreements" shall mean the (i) the Service Agreement dated as
of the Closing Date, among AVLIC, ALIC and AML, substantially in the form
attached hereto as Exhibit E; (ii) the Service Agreement dated as of the Closing
Date between AIC and ALIC, substantially in the form attached hereto as Exhibit
F; and (iii) the Marketing Services Agreement dated as of the Closing Date
between AML and AIC, substantially in the form which shall be attached hereto as
Exhibit G within 14 days after the date of this Agreement.

1.92 "Shares" shall mean all issued and outstanding shares, par value $1.00
per share, of the capital stock of Holding Company.

1.93 "Statement" shall mean the statement on Form A to be filed by AML
pursuant to Neb. Rev. Stat. Section 44-2126 with the Director of Insurance for
the State of Nebraska, which Statement shall seek approval of the full
implementation of this Agreement and acknowledge that immediately after the
Closing ALIC shall possess more than 50% of the equity interest in Holding
Company (and indirectly, in AVLIC), and that ALIC accordingly shall possess the
power as shareholder to exercise control over those entities.

1.94 "Subsidiary" shall mean each of those Persons, regardless of
jurisdiction of organization, of which a specified Person, directly or
indirectly through one or more Subsidiaries, owns beneficially securities having
more than 50% of the voting power in the election of directors (or Persons
fulfilling similar functions or duties) of such Person, without giving effect to
any contingent voting rights.

1.95 "Taxes" shall mean all taxes, charges, fees, levies, or other similar
assessments or liabilities, including without limitation income, gross receipts,
ad valorem, premium, excise, real property, personal property, windfall profit,
sales, use, transfer, licensing, withholding, employment, payroll and franchise
taxes imposed by the United States of America or any state, local or foreign
government, or any subdivision, agency or other similar Person of the United
States or any such government whether payable directly or by withholding and
whether or not requiring the filing of a return; and such term shall include any
interest, fines, penalties, assessments, or additions to tax resulting from,
attributable to or incurred in connection with any such tax or any contest or
dispute thereof.

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<PAGE>

1.96 "Tax Returns" shall mean any report, return or other information
required to be provided to or filed with a taxing or other governmental
authority in connection with Taxes.

1.97 "Third Party" shall mean a Person other than ALIC or AML.

1.98 "Transfer Notice" shall mean the notice describing the material terms
of the bona fide offer of a Proposed Purchaser to a Selling Party, which notice
shall be in reasonable detail and shall include, without limitation, the
proposed purchase price, the amount and kind of consideration to be paid and the
identity of the Proposed Purchaser.

1.99 "12/31/94 Value" shall mean the sum of the Value of AVLIC and the
Value of AIC, both as of December 31, 1994.

1.100 "Unilateral Auction" shall mean an auction in which one party to
this Agreement is required to submit an offer to the other party to this
Agreement specifying a price per Share at which it will either sell its Shares
or purchase the other party's Shares, in accordance with Section 2.6(e) hereof.

1.101 "Unilateral Auction Notice" shall mean a written communication given
by one party to this Agreement to the other party to invoke a Unilateral
Auction.

1.102 "Value" shall mean the book value of a specified Person as of a
specified date, measured in accordance with GAAP based on an audited GAAP
Statement or, if otherwise permitted herein, a Verified unaudited GAAP
Statement.

1.103 "Variable Products" shall mean life insurance policies and/or
annuities under which (i) the policyholder has the right to assume the
investment risk (including loss of principal), in whole or in part, and (ii) the
policyholder has the right to direct the manner in which the policy or annuity
funds shall be invested and the policyholder's options shall include at least
one separate account.

1.104 "Verified" shall mean accompanied by a representation that the
subject financial statement is prepared in accordance with GAAP and with all
applicable laws, and presents fairly, in all material respects, all the
information contained therein, including without limitation the assets,
Liabilities, and capital and surplus of the subject Person as of the date
thereof, and such Person's results of operations and cash flows for and during
the respective periods covered thereby, and is accompanied by a signed statement
to such effect by the chief financial officer of the subject Person.

1.105 "Work Papers" shall mean all summaries, calculations compilations
and similar written documentation derived from the

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<PAGE>

Books and Records of AVLIC or AIC and used or prepared by accountants in the
process of computing the Value of such companies.

ARTICLE II

FORMATION AND TERMS OF JOINT VENTURE

At the Closing, ALIC and AML shall enter into the Joint Venture on the
following terms and conditions, and at and following the Closing, the occurrence
of which shall be evidenced by the execution and delivery of the Closing
Confirmation, the provisions of this Article II together with the provisions of
Articles XII and XIII and any agreements or other documents executed pursuant to
this Article II shall survive and shall constitute the entirety of the parties'
agreements with respect to the Joint Venture.

2.0 PURPOSE OF JOINT VENTURE. The purpose of the Joint Venture shall be
to own and manage AVLIC and AIC as provided herein, and to acquire, manage,
transfer, dissolve and/or otherwise operate such other Persons and/or business
operations as the parties may determine from time to time. Holding Company
shall have such powers as are necessary or appropriate to carry out the purposes
of the Joint Venture, including without limitation the following powers:

(a) to own, form, manage, operate, sell, transfer and dissolve any
Subsidiary;

(b) to borrow money and to guarantee the obligations of any
Subsidiary for any business, object or purposes of the Joint Venture from time
to time, without limit as to amount, and to secure the payment thereof by the
creation of any Lien;

(d) to open, maintain and close bank accounts, to draw checks and
other orders for the payment of money;

(e) to employ and dismiss from employment any and all employees,
agents or independent contractors;

(f) to sue and to defend suits and to prosecute, settle or compromise
claims by or against others;

(g) to enter into, make and perform all such Contracts as may be
necessary or advisable or incident to the carrying out of the foregoing
purposes;

17
<PAGE>

(h) to exercise such additional powers as are granted by the Laws of
the State of Nebraska, including those powers granted to a Nebraska corporation
under the provisions of the Nebraska Business Corporation Act which are not
otherwise inconsistent with any specific provision of this Agreement; and

(i) to take such other actions as the board of directors of Holding
Company may deem necessary or advisable in connection with the business of the
Joint Venture, including the retention of agents, independent contractors,
attorneys, accountants and other experts selected by such board of directors on
behalf and at the expense of Holding Company, and in connection with the
preparation and filing of all Joint Venture Tax Returns.

2.1 FORMATION OF HOLDING COMPANY. Prior to the Closing, the parties
shall cause to be taken all actions necessary to form Holding Company, with
10,000 Shares of capital stock, par value $1.00 per Share, authorized for
issuance. The articles of incorporation of Holding Company shall be as set
forth in Exhibit H hereto. Prior to the Closing, the parties shall, as
incorporators, adopt Bylaws for Holding Company in the form attached hereto
as Exhibit K, elect the Directors nominated by the parties in accordance with
Section 2.4(a) hereof, and elect the initial officers of Holding Company as
provided in Section 2.4(f) hereof. At the Closing, ALIC shall contribute or
cause to be contributed 100% of the capital stock of AVLIC and AIC to Holding
Company, free and clear of all liens and encumbrances of any kind whatsoever,
and AML shall contribute a cash amount equal to the Initial Investment. One
hundred Shares shall thereupon be issued as follows: 66 to ALIC and 34 to
AML, and such Shares shall constitute all of the then issued and outstanding
Shares of Holding Company.

2.2 CAPITALIZATION OF HOLDING COMPANY.

(a) Holding Company shall make a capital contribution to AVLIC equal
to the cash it receives on the Closing Date, less an amount sufficient to pay
expenses and any obligation of Holding Company pursuant to Section 2.10(b)
hereof.

(b) During the term of the Joint Venture, ALIC and AML shall fund
capital calls of Holding Company when necessary to permit Holding Company to
maintain AVLIC's and/or AIC's capital, as determined by action of the board of
directors of Holding Company declaring a capital call. Each party shall pay
that portion of the aggregate capital contribution which is equal to its
proportionate share of the then outstanding Shares of Holding Company.

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<PAGE>

such indemnification payments are made hereunder, the relative amounts paid with
respect to such obligation by the parties under their respective Guaranties and
under this Section 2.2(c) are proportionate to the parties' ownership of the
Shares as of the date such Guaranty Payment was made. For this purpose and for
purposes of the following sentence, any payments made by any AML Parent
described in Section 2.8(i) hereof under its separate Guaranty shall be treated
as payments made by AML. In accordance with the foregoing, following any
transaction in which either ALIC or AML becomes the owner of all of the Shares,
such owner shall indemnify the other party for the full amount of any payment
made under such other party's Guaranty following the closing of such purchase.
The provisions of this Section 2.2(c) shall survive termination of the Joint
Venture.

(d) If and when Holding Company receives any amounts under Section
2.5 in respect of the exercise of any portion of the Option, Holding Company
shall, unless the board of directors of Holding Company otherwise determines,
make a capital contribution to AVLIC in an amount equal to 90% of such amount
received.

2.3 DISTRIBUTION EFFORTS AND COMPETITION.

(a) Except as otherwise provided in Subsection (c) below, ALIC and
AML shall use all reasonable efforts and take all reasonable actions to
encourage their respective Distribution Forces, consistent with the requirements
of law and to the extent not prohibited by any other applicable Contract
executed prior to the date of this Agreement, to accept appointment by AVLIC and
to distribute the Variable Products and Fixed Annuities of AVLIC. More
specifically, AML shall commit to take the actions set forth in the marketing
plan set forth as Exhibit I to this Agreement.

(b) Except as otherwise provided in Subsection (c) below, while the
Joint Venture is in effect, neither AML nor ALIC nor any Affiliate of either
(other than Holding Company and its Subsidiaries) shall, directly or indirectly,
or in combination with any other Person, (i) sell, issue, sponsor or provide any
Variable Products or Fixed Annuities except Variable Products or Fixed Annuities
of AVLIC; or (ii) provide any incentive, value, inducement, recognition or other
reward for any member of its Distribution Force or any other agent, employee or
representative thereof for selling any Variable Products or Fixed Annuities
which are not AVLIC products; PROVIDED, HOWEVER, that the foregoing limitation
shall not limit either party's right to distribute any Variable Product or Fixed
Annuity product of any Person other than AVLIC, or to provide any incentive
described in clause (ii) above, in any state until and unless AVLIC has obtained
all licenses and approvals necessary or appropriate to permit a comparable
product of AVLIC to be distributed in such state.

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<PAGE>

(1) the distribution by ALIC of its Low Load Products, which may
be sold through such marketing channels as ALIC may determine in its reasonable
discretion, including without limitation through non-commission-earning
financial planners and ALIC's Affiliate, Veritas Corp.; PROVIDED, HOWEVER, that
ALIC's Low Load Products shall not be sold by or through ALIC's or AVLIC's
Distribution Force in any state in which AVLIC has obtained all licenses and
approvals necessary or appropriate to permit a comparable product of AVLIC to be
distributed in such state (but DE MINIMIS sales in violation of this clause
shall not be deemed a material breach of this Agreement);

(2) the distribution of group fixed annuities and group Variable
Products of ALIC, which may include an option to convert all or part of such
Contract to a Fixed Annuity or an annuity which is a Variable Product upon
retirement, sold by ALIC's pension department to group pension and retirement
plans or the individual members of such group pursuant to Sections 403(b) or 457
of the Code;

(3) the solicitation or acceptance by ALIC or AML of renewals,
replacements, or other continued or increased Fixed Annuity contributions by
Persons who have had annuity policies with such party on or prior to the Closing
Date;

(4) the distribution, following any Corporate Transaction of
ALIC, of Variable Products or Fixed Annuities through marketing channels which
do not include the Distribution Force of ALIC, or the distribution, following
any Corporate Transaction of AML, of Variable Products or Fixed Annuities
through marketing channels which do not include the Distribution Force of AML;

(5) the acquisition and servicing by either party of any
existing Variable Products or Fixed Annuity business originated by a Third
Party, and any associated renewals, replacements or other continued or increased
contributions by holders of such Variable Products or Fixed Annuities; or

(6) any distribution activities of any employees or agents of
AmerUs Bank or any of its subsidiaries; PROVIDED, HOWEVER, that AML must employ
all reasonable efforts, in accordance with applicable law, to encourage the
employees or agents of AmerUs Bank who are registered representatives to accept
appointment with AVLIC and with AIC and to distribute the Variable Products and
Fixed Annuities of AVLIC.

(d) While the Joint Venture is in effect and for a period of two
years thereafter, neither AML nor ALIC nor any Affiliate of either (other than
Holding Company and its

20
<PAGE>

Subsidiaries) shall, directly or indirectly, or in combination with any other
Person,

(1) knowingly appoint, employ, recruit or otherwise solicit or
engage as an employee or as a member of its Distribution Force any individual
who was, within two years prior to such appointment, a member of the
Distribution Force of the other party to this Agreement or any Affiliate thereof
(other than Holding Company and its Subsidiaries) or an employee of such other
party or any Affiliate thereof (other than Holding Company and its
Subsidiaries);

(2) except with the prior written agreement of the other party
to this Agreement, utilize, directly or indirectly, for any purpose other than
the business interests of the Joint Venture, any policyholder information,
customer lists or other proprietary material of or relating to Holding Company
or its Subsidiaries; PROVIDED, HOWEVER, that any such action on the part of
individual members of a party's Distribution Force with respect to such
information shall not be deemed to violate this section; and PROVIDED FURTHER
that this provision shall not prevent either ALIC or AML or any of their
Affiliates (other than Holding Company and its Subsidiaries) from utilizing the
policyholder information, customer lists or other proprietary material which it
has developed with respect to any Person who is a customer of such Person or of
an Affiliate thereof (other than Holding Company or its Subsidiaries) and who is
also a customer of Holding Company or a Subsidiary thereof; or

(3) solicit policyholders and other customers of Holding Company
and/or its Subsidiaries for the purpose of attempting to replace any policy
issued by or other product sold by or through Holding Company and/or its
Subsidiaries with a policy issued by or product sold through such party or its
Affiliates; PROVIDED, HOWEVER, that incidental violations of this limitation by
individual insurance agents shall not be deemed to violate this section absent
evidence that the violations resulted from a marketing plan, scheme or effort of
the party by which such agent is appointed.

(e) ALIC or AML or any Affiliate of either (other than Holding
Company and its Subsidiaries) may make and/or enter into such acquisitions,
divestitures, mergers, consolidations, reorganizations or other transactions
affecting its corporate structure as each may in its sole discretion determine;
PROVIDED that if any such transaction involves or constitutes a change of
control with respect to ALIC or AML, then the other party shall have the right
in its sole discretion to give, within thirty days after such party receives
notice of such change of control, a Unilateral Auction Notice to the party
engaging in such transaction. A "change of control" shall occur if a majority
of the board of directors of an entity or, if an ultimate parent exists at such
time, the board of directors of such ultimate

21
<PAGE>

parent, shall consist of individuals who were not directors of such entity prior
to such transaction or who were not nominated for board membership by such
directors.

(f) The parties intend that AVLIC shall develop and market its own
Low Load Product(s).

2.4 GOVERNANCE AND CONTROL. The following provisions shall be implemented
as soon as practicable after the Closing, and the governance arrangements and
the agreements of ALIC and AML which are set forth in this Section 2.4 shall be
continuing obligations of the parties throughout the continuance of the Joint
Venture, except as otherwise expressly provided in this Agreement:

(a) The board of directors of Holding Company shall be comprised of
eight members, four of whom shall be selected by ALIC and four of whom shall be
selected by AML. Of the four directors selected by each party, two shall be
Inside Directors and two shall be Outside Directors.

(b) As soon as possible after the Closing, the parties shall take all
action necessary to cause Lawrence J. Arth to be elected as the Chief Executive
Officer of Holding Company and of AVLIC. The Chief Executive Officer's term of
office at both Holding Company and AVLIC shall continue for five years from the
Closing Date or until a successor is duly elected by a majority of the board of
directors of Holding Company at an earlier date.

(c) ALIC and AML shall cause the boards of directors of AVLIC and of
AIC to be comprised of six members, three of whom shall be selected by ALIC and
three of whom shall be selected by AML. All such directors shall be Inside
Directors.

(d) ALIC and AML shall cause the board of directors of each of AVLIC
and of AIC to form an executive committee consisting of two directors, one of
whom shall be selected by ALIC and one of whom shall be selected by AML;
PROVIDED that such selections must be mutually acceptable to both parties in
their reasonable discretion. As soon as possible after the Closing, ALIC shall
take all action necessary to select Kenneth C. Louis as its initial appointee to
each such executive committee, and AML shall take all action necessary to select
D T Doan as its initial appointee to each such executive committee, and the
parties agree that those selections are mutually acceptable. Any action of
either executive committee shall require the unanimous vote of both of its
members, and if one member is not present or is unable to vote on such matter,
or in the event of a vacancy, then the executive committee shall not take any
action until two members selected in accordance with this subsection (d) are
able to vote. The executive committees of AVLIC and AIC shall have such duties
as the respective board of directors may direct, but it is understood that the
Chief Executive Officer of each of

22
<PAGE>

AVLIC and AIC shall report to the executive committee of such entity.

(e) ALIC and AML shall jointly cause to be selected an individual who
was not previously an employee of either party, and the parties shall cause such
individual to be elected as President of AVLIC. The President of AVLIC shall
report to the Chief Executive Officer of AVLIC.

(f) ALIC and AML shall jointly cause to be elected as the initial
officers of Holding Company, AVLIC and AIC those individuals as set forth on
Exhibit J hereto.

(g) The following provisions shall govern the boards of directors of
each of Holding Company, AVLIC and AIC:

(1) Any action of the board of directors shall require the
affirmative vote of a majority of the full number of directors specified in this
Agreement, whether or not each director is present and/or eligible to vote on
such matter, and whether or not any vacancy occurs with respect to one or more
seats on such board.

(2) Upon the express written direction of ALIC or AML, which may
be given at any time in the sole discretion of either party, with or without
cause, ALIC and AML shall together take such actions as may be necessary to
remove any director or committee member selected and/or appointed by the party
giving such direction, without prior notice or delay. In the event a vacancy
occurs, whether due to resignation, death, removal or other cause, then the
party which selected and/or appointed the director or committee member who
vacated such position shall promptly select and/or appoint a new director and/or
committee member, whom the parties shall promptly cause to be elected to fill
such vacancy.

(3) Any two members of the board of directors may, upon written
request directed to the Secretary or the Chairman of the corporation,

a) call a meeting of the board of directors;

b) place any matter on the agenda for any meeting of the
board of directors; and/or

c) call for a vote on any agenda item during any meeting
of the board of directors.

(4) To the extent not inconsistent with the specific provisions
set forth above, the board of directors may

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<PAGE>

form such committees and elect such officers as may be necessary or appropriate.
Except as otherwise specifically provided above, the term of office for any
officer of Holding Company, AVLIC and AIC shall be one year. Any office not
filled by reelection or new election by action of the board of directors shall
remain vacant, PROVIDED, HOWEVER, that neither party may, without the consent of
the other, arbitrarily cause the directors appointed by it to refuse to vote in
such election.

(h) As soon as possible after the Closing, the parties shall take all
action necessary to adopt the by-laws set forth as Exhibits K, L and M hereto as
the by-laws of Holding Company, AVLIC and AIC, respectively.

(i) In the event that any vote by the shareholder (Holding Company)
of AVLIC or AIC is required at any time, such vote shall be made only after and
in accordance with a vote of the Board of Directors of Holding Company.

(j) Any Contract of AVLIC with AIC, Holding Company, ALIC and/or AML
shall be effective only upon approval by the board of directors of AVLIC; any
Contract of AIC with AVLIC, Holding Company, ALIC and/or AML shall be effective
only upon approval by the board of directors of AIC; and any Contract of Holding
Company with AVLIC, AIC, ALIC and/or AML shall be effective only upon approval
by the board of directors of Holding Company. Until and unless such approval is
obtained, any such Contract shall be void ab initio.

2.5 OPTION. From and after the Closing, AML shall have the option to
acquire newly issued Shares of Holding Company which would, together with prior
issuances of Shares to AML, total up to 49% of the outstanding Shares of Holding
Company (the "Option"), on the terms and subject to the conditions set forth in
this Section 2.5.

(a) The Option shall not be exercisable pursuant to Sections 2.5(b)
and (c) hereof until and unless the AML Weighted Premium, for at least one
calendar month at any time during the Option Period, exceeds the AML Baseline
Weighted Premium.

(b) Subject to Section 2.5(a) hereof, the Option shall be exercisable
by AML in three portions, which may be exercised singly or sequentially with one
or both of the other portions, and shall be exercised in the order set forth
below. Each portion of the Option shall individually permit AML to acquire that
number of newly issued Shares which will, when added to AML's existing Shares,
increase AML's percentage ownership of the aggregate outstanding Shares by 5%.
If and to the extent that, in any calendar month, any of the Option Ratio
percentage(s) set forth below is(are) met or exceeded, then the corresponding 5%
portion(s) of the Option shall be exercisable, at the exercise price(s) which
are set forth below and are expressed as a

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<PAGE>

percentage of the Aggregate Investment. AML's aggregate percentage ownership of
the Shares following its exercise of each such portion of the Option shall be as
set forth below.

EXERCISE PRICE
(AS A % OF POST-EXERCISE
OPTION RATIO AGGREGATE INVESTMENT) AGGREGATE % OF SHARES
------------ --------------------- ---------------------
200% 24.1% 39%
300% 28.4% 44%

400% 34.0% 49%

(c) To the extent any portion(s) of the Option become(s) exercisable
in accordance with the provisions of this Section 2.5, AML shall, in order to
exercise such portion(s) of the Option, give ALIC written notice of AML's
intention to exercise such portion(s) of the Option within 30 days after the
parties determine that such portion(s) of the Option is(are) exercisable, and
shall consummate the exercise of such portion(s) of the Option within 60
additional days (as to any exercisable portion of the Option, the "Exercise
Period"). Prior to the expiration of the Exercise Period, AML shall designate a
time at which it shall consummate such exercise at the offices of Holding
Company and/or AVLIC in Lincoln, Nebraska or such other place as the parties may
reasonably agree. At such time and place, AML shall pay to Holding Company the
exercise price specified in Subsection 2.5(b) hereof, in cash or by wire
transfer of immediately available funds, and Holding Company shall cause to be
delivered the certificates representing the Shares purchased pursuant to such
exercise.

(d) Any failure by AML to exercise any portion(s) of the Option
during the Exercise Period applicable to such portion(s) shall cause the
following consequences, effective at the end of such Exercise Period:

(1) Such unexercised portion(s) of the Option and any and all
other portion(s) of the Option which have not previously been exercised shall
lapse and shall be of no further force or effect; and

(2) Sections 2.4(a), (c), (d) and (g)(1) of this Agreement shall
be null and void, and each of the shareholders of Holding Company shall
thenceforth be entitled to elect that portion of the directors of Holding
Company, AVLIC and AIC which corresponds to its then percentage ownership of the
Shares.

(e) To the extent the Option or any portion(s) thereof does(do) not
become exercisable during the Option Period in accordance with the provisions of
Sections 2.5(a) and (b) hereof, then ALIC may in its sole and absolute
discretion, at any time after the expiration of the Option Period, give notice
to AML

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<PAGE>

that it is waiving all of the limitations in Sections 2.5(a) and (b) of this
Agreement which, by their terms, prevented the Option from becoming exercisable,
and AML shall thereupon be entitled to exercise the Option in accordance with
Subsection 2.5(c) hereof.

2.6 DISPUTE RESOLUTION AND AUCTION.

(a) If at any time during the continuation of the Joint Venture the
board of directors of AVLIC or AIC is unable to resolve any matter which has not
previously been agreed to or decided by a written agreement of the parties or by
a vote of such board of directors taken within the prior six months, then such
matter shall be referred to the board of directors of Holding Company. If the
board of directors of Holding Company is unable to resolve any matter which has
been the subject of a vote of the directors (whether referred from the board of
directors of AVLIC or AIC or otherwise), then:

(1) that matter shall be referred to the Outside Directors of
Holding Company, and the Outside Directors shall within 15 Business Days attempt
to resolve such matter using such means of communication or meetings as may be
appropriate under the circumstances; and

(2) if such matter remains unresolved at the end of the 15-
Business Day period described in the foregoing paragraph, then the parties shall
within ten additional Business Days select a mediator mutually agreeable to the
parties or submit the disagreement to mediation under the Commercial Mediation
Rules of the American Arbitration Association. The mediator shall not have
authority to impose a settlement upon the parties, but will attempt to help
ALIC, AML and/or their respective appointees to the board of directors of
Holding Company work in good faith to reach a satisfactory resolution of the
disagreement. The mediator shall end the mediation whenever, in his or her
judgment, further efforts at mediation would not contribute to a resolution of
the submitted disagreement. Any fees and expenses related to such mediation
shall be paid one-half by ALIC and one-half by AML.

Until and unless the disputed matter is resolved in accordance with the
provisions of this Agreement, and after the Outside Directors have attempted and
have been unable to resolve such matter as provided above, no action shall be
taken by any officer of Holding Company or any Subsidiary thereof which would
affect the subject matter of the dispute. Such officers may, however, continue
to perform all of the duties of their respective offices with regard to any
other matters.

(b) After the expiration of five years from the Closing Date, in the
event that any Disputed Issue which is a Major Issue remains unresolved
following the efforts at resolution described in Section 2.6(a), then within 30
days after

26
<PAGE>

the conclusion of such efforts, either party may, by giving an Auction Notice to
the other, initiate an Auction, as described below:

(1) In the event the party receiving such Auction Notice
disputes that the question or decision is a Major Issue, such party must give
notice of such dispute to the other party within 15 days of its receipt of the
Auction Notice and, if such party fails to give such notice, the question or
decision shall be conclusively deemed to be a Major Issue and any claim or
argument to the contrary shall be waived. ALIC and AML agree that any disputes
arising out of or relating to the determination of whether a question or
decision constitutes a "Major Issue" shall be settled by arbitration in
accordance with the Rules of the American Arbitration Association (the "AAA
Rules") and the Federal Arbitration Act. The determination of the arbitrator
shall be expedited to the fullest extent possible, consistent with the AAA
Rules, and such determination shall be deemed final. In the event arbitration
is invoked as provided herein, the time periods set forth below for the conduct
of the Auction shall not begin to run until after the arbitrator's decision is
received by the parties.

(2) In the event an Auction Notice is given in accordance with
this provision, then the Noticing Party shall, within 60 days after giving the
Auction Notice, deliver to the other party an offer specifying the per-share
price at which it would purchase the other party's Shares.

(3) Within 60 days after the date of the Auction Notice or, if
later, within ten days after the Noticing Party delivers the offer described in
subparagraph (2) above, the other party may deliver to the Noticing Party an
offer specifying the per-share price at which it would purchase the Noticing
Party's Shares.

(4) The Auction shall continue with the submission of subsequent
offers, if any, by each party within ten Business Days of receipt of the other
party's previous offer in accordance with the provisions of this Section 2.6(b),
until (x) any such ten-day period expires without the submission of an offer by
the party entitled to submit same and, in such event, the previous offer made by
the other party shall be deemed accepted immediately prior to the expiration of
such period; or (y) one party delivers to the other a written acceptance of the
other party's then present offer.

(5) Each offer submitted in accordance with this Section 2.6(b)
shall be in writing, shall be delivered by hand, courier service, overnight mail
or delivery service, or telecopy, and shall be effective at the addresses set
forth in Article XII hereof when duly given (pursuant to Article XII hereof)
within the time periods specified above, as such time periods are

27
<PAGE>

extended or modified by written agreement of the parties. Each offer hereunder
shall be an unconditional offer to purchase all, but not less than all, of the
other party's Shares, for an amount payable in cash at a closing in accordance
with this Section 2.6(b), and each offer must be at least one half of one
percent (0.5%) higher than the preceding offer, but in all events such increase
in the per-Share offer shall be an amount which, when multiplied by the
aggregate number of Shares outstanding, equals at least $500,000. Each offer
shall, once made, be irrevocable until the earlier of (x) the expiration of the
period within which the other party may submit its own offer; or (y) the other
party actually submits its own offer.

(6) The party whose offer is accepted as provided herein shall,
within one year after the Acceptance Date (or any shorter period as such party
may determine), consummate its purchase of all the Shares held by the other
party. During the period prior to the closing of the purchase and sale
transaction, the seller shall cooperate fully with the purchaser in all
respects, including but not limited to all actions necessary to facilitate such
closing and to continue the operation of the business, but no action shall be
taken by either party or any officer of Holding Company or any Subsidiary
thereof other than in the ordinary course of business unless both ALIC and AML
have agreed to such action or unless the purchaser has provided an irrevocable
letter of credit or other similar evidence satisfactory to the seller of its
ability to close such purchase and sale transaction, in which case the purchaser
may (i) immediately designate an individual whom the parties will immediately
cause to be elected as the Chief Executive Officer of Holding Company (and, at
the purchaser's discretion, AVLIC and/or AIC), and (ii) take such other actions
as the purchaser may reasonably determine. At the closing of the purchase and
sale of Shares, the purchaser shall pay to the other party the purchase price,
together with interest at a rate per annum equal to the Prime Rate plus 3% from
the Acceptance Date to the date of such closing, based on the actual number of
days elapsed from and including the Acceptance Date to the date of payment and
based on a 360-day year. At such closing the seller shall transfer its Shares
free and clear of any and all liens, mortgages, pledges, security interests or
other restrictions or encumbrances (other than any Liens arising out of
Contracts approved by the parties hereto), but the transfer shall otherwise be
made without representation or warranty of any kind. Upon consummation of any
such transaction, this Agreement shall be deemed terminated.

(c) Except for matters which are proposed by AML for a vote of the
shareholders of Holding Company, or matters as to which this Agreement directs
the votes of the parties as shareholders, if at any time after the Closing any
matter is determined by the vote by ALIC of its majority equity interest in
Holding Company without the concurring vote of AML, then, at any

28
<PAGE>

time within 60 days after such vote by ALIC, AML may in its sole discretion give
a Unilateral Auction Notice to ALIC.

(d) If at any time after the Closing the board of directors of
Holding Company is unable to resolve any Disputed Issue which has been the
subject of a vote of the directors and the Outside Directors have attempted to
and have been unable to resolve such Disputed Issue, then neither the Chief
Executive Officer of Holding Company nor of AVLIC shall take, or cause or permit
any other officer of Holding Company, AVLIC or AIC to take, any action which
would affect such Disputed Issue, other than routine actions consistent with a
course of action previously approved by the board of directors of Holding
Company, AVLIC or AIC.

(1) In the event of a breach of Subsection 2.6(d), or if a
Disputed Issue becomes the subject of a vote of the directors after the Chief
Executive Officer of Holding Company or AVLIC takes, or causes or permits
another officer of Holding Company, AVLIC or AIC to take, an action which would
have been prohibited by Subsection 2.6(d) had the directors' vote occurred
earlier, then the Chief Executive Officer shall promptly either:

a) Obtain ratification of such action by a vote of the
board of directors of Holding Company; or

b) Reverse such action and place Holding Company and its
Subsidiaries in the same position as if such action had
never occurred.

(2) If the requirements of Subsection 2.6(d)(1) are not met
within 15 Business Days after the vote of directors referred to in Subsection
2.6(d) or 2.6(d)(1) above, and

a) if the Disputed Issue is a Material Issue, or

b) if the prohibited action described in Section 2.6(d) or
Section 2.6(d)(1) occurred after the above-referenced
directors' vote and was not taken pursuant to a binding
and irrevocable commitment made prior to such
directors' vote (whether or not the Disputed Issue is a
Material Issue),

then, if such Chief Executive Officer is Mr. Arth or another individual who is
affiliated concurrently or who was, within two years prior to assuming his or
her position as Chief Executive Officer of Holding Company or AVLIC, affiliated
with ALIC, then

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<PAGE>

AML may in its sole discretion give ALIC a Unilateral Auction Notice, and if
such Chief Executive Officer is an individual affiliated concurrently or who was
within two years prior to assuming his or her position as Chief Executive
Officer of Holding Company or AVLIC affiliated with AML, then ALIC may in its
sole discretion give AML a Unilateral Auction Notice. Any Unilateral Auction
Notice pursuant to this Section 2.6(d)(2) shall be given within thirty days
after the expiration of the 15-Business Day period specified in the first clause
of this Section 2.6(d)(2).

(e) If one party gives to the other a Unilateral Auction Notice, then:

(1) If any portion(s) of the Option remains in effect but
has(have) not yet been exercised, then AML shall have the immediate right to
exercise such portion(s) in accordance with Section 2.5(c) hereof (except that,
if inconsistent, the time periods for such exercise shall be as set forth
herein), irrespective of any restrictions on exercisability which are set forth
in Section 2.5(a) or 2.5(b) hereof. In such event, AML shall give notice of its
intent to exercise such portion(s) of the Option within 30 days of the date of
the Unilateral Auction Notice, and shall consummate the exercise of such
portion(s) of the Option prior to or concurrently with the closing of the
purchase and sale transaction described in Section 2.6(e)(4) below.

(2) Within 75 days of its receipt of a Unilateral Auction
Notice, the Offering Party shall deliver to the other party (using such means as
are specified in Section 2.6(b)(5)) an irrevocable offer specifying the per-
share price at which the Offering Party will either sell all its Shares of
Holding Company or purchase all the Shares of Holding Company which are then
owned by the other party. Such offer shall be unconditional and shall provide
for the purchase price to be paid in cash at a closing in accordance with this
Section 2.6(e). The Offering Party's offer shall be irrevocable for the 15-day
period described in the following Section.

(3) The Other Party shall, within 15 days of its receipt of the
Offering Party's offer, accept, in writing, either the Offering Party's offer to
sell the Shares owned by the Offering Party or the Offering Party's offer to
purchase the Shares owned by the Other Party. If the Other Party does not
respond in writing within such 15-day period, then the Other Party shall be
deemed to have accepted the Offering Party's offer to sell its Shares
immediately prior to the expiration of such 15-day period.

(4) The purchase and sale of such Shares shall be consummated
within one year after the Acceptance Date (or any shorter period as the
purchasing party may determine). During

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<PAGE>

the period prior to the purchase and sale transaction, the seller shall
cooperate fully with the purchaser in all respects, including but not limited to
all actions necessary to facilitate such closing and to continue the operation
of the business, but no action shall be taken by either party or any officer of
Holding Company or any Subsidiary thereof other than in the ordinary course of
business, unless both ALIC and AML have agreed to such action or unless the
purchaser has provided an irrevocable letter of credit or other similar evidence
satisfactory to the seller of its ability to close such purchase and sale
transaction, in which case the purchaser may (i) immediately designate an
individual whom the parties will immediately cause to be elected as the Chief
Executive Officer of Holding Company (and, at the purchaser's discretion, AVLIC
and/or AIC), and (ii) take such other actions as the purchaser may reasonably
determine. At the closing of the purchase and sale of Shares, the purchaser
shall pay to the other party the purchase price, together with interest at a
rate per annum equal to the Prime Rate plus 3% from the Acceptance Date to the
date of such closing, based on the actual number of days elapsed from and
including the Acceptance Date to the date of payment and based on a 360-day
year. At such closing, the seller shall transfer its Shares free and clear of
any and all liens, mortgages, pledges, security interests or other restrictions
or encumbrances (other than any Liens arising out of Contracts approved by the
parties hereto), but the transfer shall otherwise be made without representation
or warranty of any kind. Upon consummation of any such transaction, this
Agreement shall be deemed terminated.

2.7 TERMINATION AND DEFAULT.

(a) The following shall constitute events of default under this
Agreement:

(1) A material breach by either party of any material provision
of this Agreement, or of any Contract between the parties which expressly states
that a breach thereof shall constitute a breach hereunder, which is not cured
within 30 days after the breaching party receives notice of such breach; or

(2) The institution of insolvency proceedings or the appointment
of a receiver with respect to a party or a substantial portion of its assets.

(b) If an event of default occurs under this Agreement, the remedies
of the non-breaching party shall include the following, which rights shall not
be exclusive but shall be cumulative and in addition to all other rights
available at law or in equity: (i) the institution of a suit for damages;
and/or (ii) the institution of a suit for specific performance. Without
limiting the generality of the foregoing, the parties expressly acknowledge that
certain terms and provisions of this Article II require the parties to engage,
in good faith, in certain

31
<PAGE>

governance- and auction-related processes and activities, and that the failure
of either party to perform the actions required of it hereunder could lead to
incalculable detriment to the other party and to the Joint Venture, which
detriment cannot be corrected with monetary damages. Therefore, the parties
agree that the remedy of specific performance shall be available to a party
following the other party's breach of its obligations under this Article II.

(c) In the event the Joint Venture is terminated as provided in this
Article II, the covenants and agreements of the parties set forth in this
Agreement which, by their terms, extend beyond such termination shall survive
and shall be enforceable in accordance with their terms.

2.8 OTHER.

(a) Except as otherwise provided in this Section 2.8(a), neither
party shall sell, assign, pledge, hypothecate or otherwise transfer the Shares
of Holding Company owned by it to any Third Party without the prior written
consent of the other party, which consent may be given or withheld in the sole
and absolute discretion of such party.

(1) Each of the parties may at any time in its sole discretion
transfer all, but not less than all, of its Shares to any Affiliate (other than
Holding Company and its Subsidiaries), subject to insurance department approval;
PROVIDED, HOWEVER, that (x) the transferring party shall not be relieved of any
of its obligations hereunder except to the extent the other party otherwise
agrees, in writing; and (y) prior to the date on which such transferee will
cease to be an Affiliate of the transferor, the Shares held by such transferee
shall be transferred back to such transferor or to another Affiliate of such
transferor which is permitted to hold such Shares as described in this
provision.

(2) At any time after the expiration of the first five years
following the Closing Date, ALIC or AML, or any transferee thereof described in
Section 2.8(a)(1) hereof, may transfer all, but not less than all, of its Shares
to a Proposed Purchaser only upon compliance with the provisions of this Section
2.8(a)(2):

a) If the Selling Party proposes to sell, assign or
otherwise transfer its Shares to a Proposed Purchaser
in a bona fide transaction, then the Selling Party
shall give a Transfer Notice to the other party to this
Agreement.

b) The party receiving a Transfer Notice shall, by giving
a Notice of Election to

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<PAGE>

the Selling Party within 60 days of receipt of such
Transfer Notice, elect to either:

i) permit all of the Selling Party's Shares be sold
to the Proposed Purchaser on the terms and
conditions specified in the Transfer Notice; or

ii) purchase all of the Selling Party's Shares on the
terms and conditions specified in the Transfer
Notice.

If such party fails to deliver its Notice of Election
within the 60-day period specified above, it shall be
deemed to have delivered a Notice of Election electing
clause i) above on the last day of such 60-day period.

c) The Selling Party shall attempt in good faith to cause
the transaction elected in the Notice of Election to be
consummated within 120 days of the date the Transfer
Notice is received on the terms and conditions set
forth in the Transfer Notice.

d) If the Notice of Election elects clause i) above, and
if the Selling Party does not close such transaction
within 120 days of the date the Transfer Notice is
received, then the Selling Party shall not transfer its
Shares unless or until it complies anew with the
provisions of this Section 2.8(a)(2).

e) If the Notice of Election elects clause ii) above, then
the Selling Party shall transfer its Shares to the
other party to this Agreement free and clear of any and
all liens, mortgages, pledges, security interests or
other restrictions or encumbrances, and shall make any
other representations or warranties contemplated under
the Transfer Notice, but the transfer shall otherwise
be made without representation or warranty of any kind.
If such transfer is not closed solely due to the
failure of the purchasing party to fulfill the terms
and conditions specified in the Transfer

33
<PAGE>

Notice, then the Selling Party shall have 120 days
after such failure to sell its Shares to the Proposed
Purchaser or another unaffiliated Third Party on
substantially the same terms and conditions as were
specified in the Transfer Notice. If the Selling Party
does not close such transaction within such 120-day
period, then the Selling Party shall not transfer its
Shares unless or until it complies anew with the
provisions of this Section 2.8(a)(2).

(b) Except for consideration paid under the Service Agreements, the
reinsurance treaty contemplated pursuant to Section 2.8(c) hereof and except as
provided below, to the extent either party or any Affiliate thereof (other than
Holding Company and its Subsidiaries) receives any fees, services, discounts,
concessions or other thing of any value whatsoever in respect of products issued
or sold by or through Holding Company or its Subsidiaries, such fee, service,
discount, concession or other thing, or the value thereof, shall be turned over
promptly to Holding Company or any Subsidiary thereof. AML may in writing from
time to time agree to except certain arrangements or Contracts from this Section
2.8(b) (and AML hereby agrees to so except that certain Administrative Service
Agreement dated as of November 30, 1995 between AIC and Neuberger & Berman
Management Incorporated and the corresponding agreement between ALIC and AIC
under which ALIC will perform all services required thereunder) but, to the
extent any such exception is made, ALIC agrees to indemnify, defend and hold
harmless AVLIC, AIC, Holding Company and AML and their respective officers,
directors, employees, agents, partners and controlling persons from and against
any and all expenses, losses, claims, Damages and Liabilities, including without
limitation reasonable attorneys' fees and expenses, caused by or in any way
resulting from or arising in connection with such arrangement or Contract from
any cause. The foregoing indemnity shall include all Damages and Liabilities
resulting from any claim of any Third Party but shall not otherwise include any
Damages incurred directly (and not vicariously) by AIC due to an action or
omission of an AIC employee, which action or omission was not also an action or
omission which was the responsibility of ALIC.

(c) The reinsurance business generated by AVLIC or any other
insurance company Subsidiary of Holding Company, in excess of (in the case of
AVLIC) the initial retention level of $100,000, shall be offered 50% to ALIC and
50% to AML for reinsurance by such party on a quota share basis and/or for
further offering to Third Parties as such party may reasonably direct. Each
such Third Party shall have a rating of at least "Excellent" by A.M. Best, Inc.
The parties shall negotiate a

34
<PAGE>

reinsurance treaty among AVLIC, ALIC and AML which would be effective at the
Closing Date or as soon thereafter as may be practicable, which treaty shall
specify the parties' agreements with respect to such reinsurance.

(d) The executive offices of Holding Company, and the executive
offices and home offices of AVLIC and AIC shall remain in Lincoln, Nebraska, and
AVLIC shall continue to be domiciled in the State of Nebraska, unless the board
of directors of Holding Company otherwise determines from time to time. As long
as the Service Agreements remain in force, AVLIC's variable operations shall be
carried out in Lincoln, Nebraska, and AVLIC's fixed annuity operations shall be
carried out in Des Moines, Iowa.

(e) At the beginning of the fifth year after the Closing Date, ALIC
and AML agree to and shall enter into discussion of the method and cost of
obtaining the services which are to be provided to AVLIC and AIC pursuant to the
Service Agreements. At such time, the parties shall consider obtaining such
services from other providers based on market conditions at that time, and shall
mutually cooperate in determining whether to terminate the Service Agreements,
or any portion of any of them, and whether to obtain such services from another
source.

(f) Holding Company and its Subsidiaries shall keep accurate, full
and complete Books and Records showing their assets and Liabilities, operations,
transactions and financial condition. All financial statements shall be
accurate in all material respects, shall present fairly the financial position
and results of Holding Company and its Subsidiaries and shall be prepared in
accordance with GAAP and, where required by Law, SAP. Except as otherwise
specifically provided, the boards of directors of each of Holding Company and
its Subsidiaries shall determine the methods to be used in the preparation of
financial statements and Tax Returns. Without limiting the generality of the
foregoing:

(1) As soon as practicable after the end of each fiscal year of
Holding Company and its Subsidiaries, respectively, a general accounting and,
unless otherwise determined by the board of directors of Holding Company, audit
shall be undertaken and made by the independent certified public accountants of
such Persons, covering its or their assets, properties, Liabilities and net
worth, and its or their dealings, transactions and operations during such fiscal
year, and all matters and things customarily included in such accounts and
audits. ALIC shall cause Holding Company, AVLIC and AIC to use their best
efforts to furnish such audited financial statements to each of ALIC and AML
within 80 days after the end of such fiscal year, followed by a report of the
audit scope and audit findings in the form of a report as described in Statement
of Audit Standards ("SAS") 61, and if required SAS 60, or such similar reports
established by the American Institute of

35
<PAGE>

Certified Public Accountants upon revocation or amendment of SAS 60 and 61,
within 120 days after the end of such fiscal year. Unaudited quarterly
financial statements of Holding Company and its Subsidiaries shall be furnished
to each of ALIC and AML within 30 days after the end of each quarter of the
fiscal year of each such Person.

(2) Each of ALIC and AML shall have access to and may inspect
and copy the Books and Records of Holding Company and of AVLIC and AIC at
reasonable times and upon reasonable notice.

(3) ALIC and/or AML may, at its option and its own expense,
conduct inspections and/or audits of the Books and Records of Holding Company,
AVLIC, AIC and, to the extent necessary to inspect and audit the fees and
expenses paid under the Service Agreements, the records of such other party
relating to services provided under any of the Service Agreements. Such
inspections and/or audits may be on a continuous or a periodic basis or both and
may be conducted by employees of such entity, or by employees of an Affiliate
thereof, or by an independent auditor retained by such Person.

(4) Holding Company shall make available to ALIC and AML such
information and financial statements in addition to the foregoing and/or at such
times as shall be required by either of them in connection with the preparation
of registration statements, current and periodic reports, proxy statements and
other documents required to be filed under federal or state laws, and shall
cooperate in the preparation of any such documents.

(5) The fiscal year of Holding Company shall be January 1
through December 31, unless the board of directors of Holding Company shall
approve any change thereto.

(g) In the event one party gives the other an Auction Notice, a
Unilateral Auction Notice or a Transfer Notice pursuant to this Agreement, then
both parties shall cause Holding Company and its Subsidiaries to provide each
other and their respective counsel, accountants, actuaries and other
representatives (including such representatives of any lender, potential venture
partner or other similar Person) with access, upon reasonable notice and during
normal business hours, to all facilities, officers, employees, agents,
accountants, actuaries, Assets and Properties, and Books and Records of Holding
Company, AVLIC and AIC, and will furnish such Persons during such period with
all such information and data (including without limitation copies of Contracts
and other Books and Records) concerning the business, operations and affairs of
Holding Company, AVLIC and AIC as such Persons shall reasonably request. Each
such Person which is not a party to this Agreement shall, agree to be subject to
and bound by the confidentiality provisions of Section 2.8(h) hereof.

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<PAGE>

(h) Each of ALIC and AML will hold, and will cause its respective
Affiliates and their respective officers, directors, employees, agents,
consultants, and other representatives to hold, in strict confidence, except as
may be necessary by reason of legal, accounting, regulatory or administrative
requirements, all confidential documents and confidential or proprietary
information concerning the other party, or concerning Holding Company or its
Subsidiaries, which is furnished to it in connection with this Agreement or in
the course of carrying out the Joint Venture established hereunder. No party
hereto will disclose or otherwise provide any such confidential or proprietary
documents or information to any other Person, except to either party's
respective auditors, actuaries, attorneys, financial advisors, other consultants
and advisors, unless such Person agrees to be subject to and bound by the
confidentiality provisions hereof. Nothing herein shall prohibit either party
from providing such information to any rating agency personnel as may be
necessary or appropriate.

(i) Except as otherwise expressly provided herein, any payment,
reimbursement or other amount due from one party to the other pursuant to this
Agreement shall be paid promptly. The provisions of this Section 2.8(i) shall
survive termination of the Joint Venture.

(j) It is understood that, prior to or after the Closing Date, AML
may be converted into a stock life insurance company to be known as "AmerUs Life
Insurance Company," which shall retain all the rights and obligations it had
prior to such conversion, including all the rights and obligations provided in
this Agreement. If at such time or thereafter during the continuation of the
Joint Venture any AML Parent shall be created, such AML Parent shall sign a
guaranty in substantially the same form as the Guaranty of AML.

2.9 CLOSING. Subject to the provisions of this Agreement, the Closing of
the transactions contemplated by this Agreement, including, without limitation,
the consummation of the Investment and issuance of the Shares, as provided in
Section 2.1 hereof, and the execution and delivery of the documents and
instruments specified in this Section 2.9, will take place at ALIC's offices in
Lincoln, Nebraska, at 10:00 a.m., local time, on the Closing Date. At the
Closing, the following actions shall be completed, with each document described
below to be in form and content reasonably satisfactory to ALIC and AML:

(a) The Service Agreements shall be executed and delivered by all
parties thereto.

(b) AML shall execute and deliver its Guaranty to AVLIC.

37
<PAGE>

(c) ALIC and AML shall each deliver to the other the officer's
certificate required pursuant to Sections 7.3 and 8.3 hereof, respectively.

(d) ALIC and AML shall each deliver to the other the legal opinion
required pursuant to Sections 7.11 and 8.9 hereof, respectively.

(e) AML shall pay the Initial Investment to Holding Company in cash,
by wire transfer according to instructions determined by the parties in writing
at least three Business Days prior to the Closing Date.

(f) ALIC shall deliver the stock certificates and executed stock
powers necessary to transfer ownership of the stock of AVLIC and AIC to Holding
Company.

(g) ALIC shall cause certificates representing the Shares issued
pursuant to Section 2.1 hereof to be delivered to ALIC and AML.

(h) The parties shall execute and/or deliver all such other
Contracts, documents and/or things as may be provided herein to be delivered at
or prior to Closing, to the extent not previously delivered.

(i) ALIC and AML shall each execute and deliver the Closing
Confirmation.

Immediately upon completion of the Closing, ALIC and AML shall hold an initial
meeting of the shareholders of Holding Company, and as soon as practicable
thereafter, the Boards of Directors of Holding Company, AVLIC and AIC shall hold
their initial meetings.

2.10 POST-CLOSING ADJUSTMENT.

(a) Within ten Business Days after completion of the Closing Value
Financial Statements, ALIC will determine and will deliver to AML written
notice setting forth ALIC's determination of the Closing Value, together with
true and complete copies of all Work Papers related thereto. Within fifteen
Business Days after the receipt by AML of such determination of the Closing
Value, AML shall deliver to ALIC written notice stating whether it agrees or
disagrees with such determination. If AML agrees with such determination and
so notifies ALIC, or does not notify ALIC that AML disagrees with such
determination within such fifteen Business Days, such determination shall be
deemed to be the Closing Value. If AML notifies ALIC within such fifteen
Business Days that AML does not agree with such determination of the Closing
Value, ALIC and AML shall, for a period of fifteen Business Days, attempt to
negotiate, in good faith, a determination of the Closing Value. If ALIC and
AML fail to reach a determination of the Closing Value within such fifteen

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Business Days, the Closing Value shall be determined by the Accounting Firm.
AML shall cause such determination by the Accounting Firm and a statement of
fees and expenses incurred by the Accounting Firm in making such
determination, together with true and complete copies of all Work Papers
related thereto, to be delivered to ALIC as soon as practicable after AML's
notice of disagreement. The parties hereto agree and acknowledge that the
determination of the Closing Value by the Accounting Firm in accordance with
this Section 2.10(a) shall be final and binding on all parties. If the
services of the Accounting Firm are used as provided herein, all fees and
expenses of the Accounting Firm shall be paid one-half by ALIC and one-half
by AML.

(b) Within ten Business Days of the final determination of the
Closing Value as provided in Section 2.10(a) hereof, then, if the Closing Value
is greater than the 12/31/94 Value, AML will pay to Holding Company, and if the
Closing Value is less than the 12/31/94 Value, ALIC and AML will cause Holding
Company to pay to AML, in cash, an amount equal to the Difference, plus interest
on the Difference at a rate per annum equal to the Prime Rate based on the
actual number of days elapsed from and including the Closing Date to the date of
payment and a 360-day year, PROVIDED, HOWEVER, that if the Difference and
interest thereon due from one party to the other pursuant to this Section
2.10(b) remain unpaid past the 3Oth day after the day such amount was due, the
interest rate will be increased to the Prime Rate plus 3% for the period from
the Closing Date to the payment date.

(c) ALIC shall and shall cause AVLIC and AIC to cooperate fully with
the Accounting Firm and provide all information and access to all personnel it
reasonably requests in connection with its determination of the Closing Value.
Both parties shall be provided access to all Books and Records and Work Papers
used by the Accounting Firm in making its determination hereunder.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF ALIC

ALIC hereby represents and warrants to AML as follows:

3.1 ORGANIZATION OF ALIC. ALIC is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Nebraska and has
the requisite corporate power and authority to enter into this Agreement and to
perform its obligations under this Agreement. ALIC is duly licensed, qualified
or admitted to do business and is in good standing in all jurisdictions in which
it is doing business and in which the failure to be so licensed, qualified or
admitted and in good standing, individually or in the aggregate with other such

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failures, has or would reasonably be expected to have a material adverse effect
on the validity or enforceability of this Agreement, on the ability of ALIC to
perform its obligations under this Agreement, or on the Business or Condition of
AVLIC or AIC.

3.2 AUTHORITY OF ALIC. The board of directors of ALIC has duly and
validly approved this Agreement and the transactions contemplated hereby. The
execution and delivery of this Agreement by ALIC and the performance by ALIC of
its obligations under this Agreement have been duly and validly authorized by
all necessary corporate action on the part of ALIC. This Agreement and the
Guaranty of ALIC constitute valid and binding obligations of ALIC and are
enforceable against ALIC in accordance with their terms, except to the extent
that (a) enforcement may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium or similar Laws now or hereafter in effect relating
to or limiting creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court or other similar
Person before which any proceeding therefor may be brought.

3.3 ORGANIZATION OF AVLIC. AVLIC is a life insurance corporation duly
organized, validly existing and in good standing under the Laws of the State of
Nebraska. AVLIC is duly licensed, qualified or admitted to do business and is
in good standing in all jurisdictions in which it is doing business and in which
the failure to be so licensed, qualified or admitted and in good standing,
individually or in the aggregate with other such failures, has or would
reasonably be expected to have a material adverse effect on the validity or
enforceability of this Agreement or on the Business or Condition of AVLIC. ALIC
has furnished to AML true and complete copies of the current articles or
certificate of incorporation and the by-laws of AVLIC (certified by the
secretary of AVLIC), including all amendments thereto.

3.4 ORGANIZATION OF AIC. AIC is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Nebraska. AIC is
duly licensed, qualified or admitted to do business and is in good standing in
all jurisdictions in which it is doing business and in which the failure to be
so licensed, qualified or admitted and in good standing, individually or in the
aggregate with other such failures, has or would reasonably be expected to have
a material adverse effect on the validity or enforceability of this Agreement or
on the Business or Condition of AIC. ALIC has furnished to AML true and
complete copies of the articles or certificate of incorporation and the by-laws
of AIC (certified by the secretary of AIC), including all amendments thereto.

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3.5 AUTHORITY FOR JOINT VENTURE. On the Closing Date, the board of
directors of ALIC will have duly and validly approved the Joint Venture and the
transactions contemplated in connection therewith and hereby. On the entry into
the Joint Venture in accordance with this Agreement, the performance by ALIC of
its obligations in connection therewith will be duly and validly authorized by
all necessary corporate action on the part of ALIC.

3.6 CAPITAL STOCK. The authorized capital stock of AVLIC consists solely
of 50,000 shares of common stock with a par value of one hundred dollars
($100.00) per share, and an aggregate of 40,000 shares of such stock have been
issued and are owned beneficially and of record by ALIC, free and clear of all
Liens. The authorized capital stock of AIC consists solely of 500,000 shares of
common stock having a par value of ten cents ($.10) per share, and an aggregate
of 209,900 shares of such stock has been issued and shall be, on and as of the
Closing Date, owned beneficially and of record by ALIC, free and clear of all
Liens. All such issued shares of capital stock of AVLIC and AIC are duly
authorized, validly issued, outstanding, fully paid and nonassessable. Except
for such shares, no securities issued by AVLIC (other than Variable Products) or
AIC are held beneficially or of record by ALIC or any of its Affiliates. There
are no outstanding securities, obligations, rights, subscriptions, warrants,
options, phantom stock rights or (except for this Agreement) other Contracts of
any kind that give any Person the right to (a) purchase or otherwise receive or
be issued any shares of capital stock of AVLIC or AIC (or any interest therein)
or any security or Liability of any kind convertible into or exchangeable for
any shares of capital stock of AVLIC or AIC (or any interest therein) or (b)
receive any benefits or rights similar to any rights enjoyed by or accruing to a
holder of such shares, or any rights to participate in the equity, income or
election of directors or officers of AVLIC or AIC.

3.7 NO SUBSIDIARIES. Neither AVLIC nor AIC has or has had at any time any
Subsidiaries and neither controls (whether directly or indirectly, whether
through the ownership of securities or by agreement or proxy, and whether alone
or acting in concert with others) any corporation, partnership, business
organization or other similar Person. For purposes of this Section, "control"
shall mean the right to elect a majority of the board of directors or other
governing body of any such Person or otherwise manage, direct or govern the
business operations of such Person.

3.8 SECURITIES LAW MATTERS. AIC is duly registered as a broker dealer
pursuant to the federal securities Laws and is duly registered as such in each
state in which the nature of its business requires such registration. AIC is a
member in good standing of the NASD. AIC has filed on a timely basis all
reports required to be filed with the Commission, NASD and any state securities
authority. To the Knowledge of ALIC, or except

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as otherwise disclosed in Section 3.8 of the Disclosure Schedule, all products
sold by AVLIC and AIC have been sold in accordance with all relevant federal and
state Laws or, to the extent any sale not in accordance with the foregoing has
occurred, any associated Damages have been fully and finally resolved and paid
in full or are barred by all applicable statutes of limitation.

3.9 NET CAPITAL REQUIREMENTS. AIC is subject to the net capital rules
under the federal securities Laws. As of December 31, 1995, AIC's actual net
capital and required net capital were $1,051,080 and $250,000, respectively, and
the ratio of aggregate indebtedness to net capital was 6.9 to 1.

3.10 NO CONFLICTS OR VIOLATIONS. The execution and delivery of this
Agreement by ALIC does not, and the performance by ALIC of its obligations under
this Agreement will not:

(a) except as disclosed in Section 3.10(a) of the Disclosure
Schedule, subject to obtaining the approvals contemplated by Sections 5.1 and
5.2 and Sections 6.1 and 6.2 hereof, violate any term or provision of any Law
which materially affects the business, operations or financial condition of the
Holding Company or its Subsidiaries or any writ, judgment, decree, injunction or
similar order applicable to ALIC, AVLIC or AIC;

(b) conflict with or result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default under,
any of the terms, conditions or provisions of the articles or certificate of
incorporation or by-laws of ALIC, AVLIC or AIC;

(c) result in the creation or imposition of any Lien in favor of any
Person other than AVLIC or AIC upon any of the respective Assets and Properties
of AVLIC or AIC;

(d) result in a breach of, or constitute (with or without notice or
lapse of time or both) a default under, or give to any Person any right of
termination, cancellation, acceleration or modification in or with respect to,
any material Contract to which ALIC, AVLIC or AIC is a party or by which any of
their respective Assets and Properties may be bound; or

(e) require ALIC, AVLIC or AIC to obtain any consent, approval or
action of, or make any filing with or give any notice to, any Person except, in
either case, as contemplated in Section 5.1 or 5.2 hereof.

3.11 BOOKS AND RECORDS. Except as disclosed in Section 3.11 of the
Disclosure Schedule (and to the Knowledge of ALIC, solely with respect to Books
and Records dated prior to January 1, 1987), the minute books and other similar
records of each of AVLIC and AIC contain a true and complete record, in all
material

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respects, of all actions taken at all meetings and by all written consents in
lieu of meetings of AVLIC's and AIC's stockholders, boards of directors and each
committee thereof. Except as disclosed in Section 3.11 of the Disclosure
Schedule, the Books and Records of AVLIC and AIC accurately reflect in all
material respects the Business or Condition of AVLIC and AIC and have been
maintained in all material respects in accordance with good business and
bookkeeping practices.

3.12 SAP STATEMENTS. ALIC has previously delivered to AML, or will have
delivered to AML upon completion, true and complete copies of the AVLIC SAP
Statements. Except as disclosed in Section 3.12 of the Disclosure Schedule, and
to the Knowledge of ALIC, each such SAP Statement complied or will comply in all
material respects with all applicable Laws when so filed, and all material
deficiencies known to ALIC or AVLIC with respect to any such SAP Statement have
been cured or corrected. Each such SAP Statement, including without limitation
each balance sheet and each of the statements of operations, capital and surplus
account and cash flow contained in the respective SAP Statement, was prepared in
accordance with SAP, is or will when filed be true and complete in all material
respects, and does or will present fairly, in all material respects, the
admitted assets, liabilities and capital and surplus of AVLIC as of the date
thereof and its results of operations and cash flows for and during the
respective periods covered thereby.

3.13 GAAP STATEMENTS. ALIC has previously delivered to AML, or will have
delivered to AML upon completion, true and complete copies of the AIC Statements
and the AVLIC GAAP Statements.

(a) Except as disclosed in Section 3.13 of the Disclosure Schedule,
and to the Knowledge of ALIC, each AIC Statement complied or will comply in all
material respects with all applicable laws when so filed and material
deficiencies known to ALIC with respect to any AIC Statement have been cured or
corrected. Each AIC Statement, including without limitation the reports to the
Commission pursuant to Section 17 of the Securities and Exchange Act of 1934 and
Rule 17a-5 thereunder was prepared in accordance with GAAP, is or will when
filed or provided be true and complete in all material respects, and does or
will fairly present, in all material respects, all of the information contained
therein, including without limitation the assets, liabilities, capital and
surplus, and results of operations of AIC as of the respective dates thereof or
periods covered thereby.

(b) Except as disclosed in Section 3.13 of the Disclosure Schedule,
and to the Knowledge of ALIC, each AVLIC GAAP Statement complied or will comply
in all material respects with all applicable laws when so filed and material
deficiencies known to ALIC with respect to any AVLIC GAAP Statement have been
cured or corrected. Each AVLIC GAAP Statement was prepared in

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accordance with GAAP, is or will when provided be true and complete in all
material respects, and does or will fairly present, in all material respects,
all of the information contained therein, including without limitation the
assets, liabilities, capital and surplus, and results of operations of AVLIC as
of the respective dates thereof or periods covered thereby.

3.14 RESERVES.

(a) Except as disclosed in Section 3.14 of the Disclosure Schedule,
all reserves and other Liabilities with respect to insurance and annuities and
for claims and benefits incurred but not reported (the "Reserve Liabilities"),
as established or reflected in the SAP Statements of AVLIC (including without
limitation the reserves and policy and contract liabilities to be reflected
respectively on Lines 1 through 11, 15, 21, 24.2, 24.3 and 24.6 of page 3 of the
Annual Statement of AVLIC (and the corresponding line numbers in the Annual
Statement of AVLIC's separate accounts)), were determined in accordance with
generally accepted actuarial standards consistently applied, are fairly stated
in accordance with sound actuarial principles, are based on actuarial
assumptions that are in accordance with those called for by the provisions of
the related insurance and annuity Contracts and in the related reinsurance,
coinsurance and other similar Contracts of AVLIC, and meet in all material
respects the requirements of the insurance Laws of its state of domicile.
Adequate provision for all such Reserve Liabilities have been made under
generally accepted actuarial principles consistently applied to cover the total
amount of all reasonably anticipated matured and unmatured benefits, dividends,
claims and other Liabilities of AVLIC under all insurance and annuity Contracts
under which AVLIC has any Liability, including without limitation any Liability
arising under or as a result of any reinsurance, coinsurance or other similar
Contract, on the date of each such SAP Statement based on then current
information regarding interest earnings, mortality and morbidity experience,
persistency and expenses. No warranty is made as to the ultimate adequacy of
the Reserve Liabilities to satisfy the Liabilities and obligations reserved
against. AVLIC owns assets that qualify as legal reserve assets under
applicable insurance laws in an amount at least equal to all such Reserve
Liabilities; and

(b) All reserves and accrued Liabilities for estimated losses,
settlements, costs and expenses from pending suits, actions and proceedings
included in the SAP Statements and described in Schedule 3.14(b) of the
Disclosure Schedule were determined in accordance with SAP and Statement of
Financial Accounting Standards No. 5 issued by the Financial Accounting
Standards Board. No warranty is made as to the ultimate adequacy of such
reserves and accrued Liabilities to satisfy the Liabilities and obligations
reserved against.

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3.15 ABSENCE OF CHANGES. Since December 31, 1994, except as disclosed in
Section 3.15 of the Disclosure Schedule or in the Annual Statement or the
December 31, 1994 AIC Statement, or as specifically disclosed in the Quarterly
Statements of AVLIC or the 1995 quarterly AIC Statements, (i) there has not been
any loss or any change in any business practice or policy or, to the Knowledge
of ALIC, any event, action or condition or any agreement to do any of the
foregoing that individually or in the aggregate has or would reasonably be
expected to have a material adverse effect on the Business or Condition of AVLIC
or AIC, (ii) each of AVLIC and AIC has operated only in the ordinary course of
business and consistent with past practice, and (iii) without limiting the
generality of the foregoing, there has not been, occurred or arisen:

(a) any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of AVLIC or AIC or any direct
or indirect redemption, purchase or other acquisition by AVLIC or AIC of any
such stock or of any interest in or right to acquire any such stock;

(b) any employment, deferred compensation or other salary, wage or
compensation Contract entered into between AVLIC or AIC and any employee of
AVLIC or AIC, except for normal and customary Contracts with agents and
consultants in the ordinary course of business consistent with past practice;

(c) any issuance, sale or disposition by either AVLIC or AIC of any
debenture, note, stock or other security issued by AVLIC (other than any
Variable Product) or AIC, or a modification or amendment of any right of the
holder of any outstanding debenture, note, stock or other security issued by
AVLIC (other than any Variable Product) or AIC;

(d) any lien created on or in any of the Assets and Properties of
AVLIC or AIC or assumed by either of them with respect to any of such Assets and
Properties, in favor of any Person other than AVLIC or AIC, which lien relates
to Liabilities individually or in the aggregate exceeding $20,000;

(e) any Liability involving the borrowing of money by AVLIC or AIC,
except in the ordinary course of business and consistent with past practice;

(f) to the Knowledge of ALIC, any amendment, termination, waiver,
disposal or lapse of, or other failure to preserve, any license, permit or other
form of authorization of AVLIC or AIC, the result of which individually or in
the aggregate has or would reasonably be expected to have a material adverse
effect on the Business or Condition of AVLIC or AIC;

(g) any amendment to the articles of incorporation or by-laws of
either AVLIC or AIC;

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(h) any termination, amendment or entering into by AVLIC as ceding or
assuming insurer of any reinsurance, coinsurance or other similar Contract or
any trust agreement or security agreement related thereto;

(i) any expenditure or commitment for additions to property, plant,
equipment or other tangible or intangible capital assets of AVLIC or AIC, in
excess of any budgeted amounts set forth in Section 3.15(i) of the Disclosure
Schedule, which expenditures or commitments exceed $200,000 in the aggregate; or

(j) any amendment or introduction by AVLIC of any insurance or
annuity Contract or product other than in the ordinary course of business
consistent with past practice.

3.16 NO UNDISCLOSED LIABILITIES. Except to the extent reflected in the
balance sheet included in the Annual Statement or the December 31, 1994 AIC
Statement, or except as disclosed in Section 3.15 or 3.16 of the Disclosure
Schedule, to the Knowledge of ALIC there were no Liabilities (other than
policyholder benefits payable in the ordinary course of business and consistent
with past practice) against, relating to or affecting AVLIC or AIC as of
December 31, 1994 exceeding $50,000 in the aggregate. Except to the extent
specifically reflected in the balance sheets included in the Annual Statement or
the December 31, 1994 AIC Statement, or except as disclosed in Section 3.16 of
the Disclosure Schedule, since December 31, 1994, to the Knowledge of ALIC
neither AVLIC nor AIC has incurred any Liabilities exceeding $50,000 in the
aggregate (other than policyholder benefits and other obligations payable in the
ordinary course of business and consistent with past practice).

3.17 [Reserved.]

3.18 LITIGATION. Except as disclosed in Section 3.18 of the Disclosure
Schedule, there are no actions, suits or proceedings pending, or threatened, at
law or in equity, and, to the Knowledge of ALIC, no investigation, event, fact
or circumstance has arisen or occurred that may reasonably be expected to result
in the commencement of the foregoing, against ALIC, AVLIC or AIC or any of their
Assets and Properties, in, before or by any Person that (i) to the extent
against AVLIC or AIC, individually involves a claim for Damages exceeding
$50,000 or an unspecified amount of Damages; or (ii) individually or in the
aggregate have or would reasonably be expected to have a material adverse effect
on the validity or enforceability of this Agreement, on the ability of ALIC to
perform its obligations under this Agreement, or on the Business or Condition of
AVLIC or AIC.

3.19 COMPLIANCE WITH LAWS. Except as disclosed in Section 3.19 of the
Disclosure Schedule, to the Knowledge of ALIC neither AVLIC nor AIC has been or
is in violation (or with or without notice or lapse of time or both, would be in
violation) of any

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term or provision of any Law or any writ, judgment, decree, injunction or
similar order applicable to AVLIC or AIC or any of their respective Assets and
Properties, except for violations which have been cured, which have been
resolved or settled through agreements with applicable governmental authorities
or which are barred by all applicable statutes of limitation. Neither AVLIC nor
AIC has ever conducted business in any state, country, province, or other
jurisdiction other than in the United States and, to the Knowledge of ALIC, no
AVLIC or AIC Representative (while a representative of AVLIC or AIC) has ever
offered, marketed or sold any product of AVLIC or AIC other than within the
United States.

3.20 EMPLOYEE MATTERS. Any Benefit Plan in effect prior to the Closing
Date with respect to any AVLIC or AIC Representative shall either (i) be amended
or terminated at or before Closing or (ii) be funded and/or managed, so as to
result in no Liabilities to AVLIC, AIC, Holding Company and/or AML after the
Closing Date. Neither AVLIC nor AIC have any plan or commitment, whether or not
legally binding, to create any Benefit Plan, and neither ALIC (except to the
extent such intention relates to the joint plans of ALIC and AML in connection
with the Joint Venture) nor any Affiliate of ALIC has any such plan or
commitment which would or could impose any Liabilities on AVLIC or AIC after the
Closing Date.

3.21 PROPERTIES. Except as disclosed in Section 3.21 of the Disclosure
Schedule (with paragraph references corresponding to those set forth below):

(a) Neither AVLIC nor AIC (and no predecessor of either): (i) owns,
operates, leases or subleases, or has ever owned, operated, leased or subleased
any Real Estate, except to the extent it has leased office space; (ii) is now or
has ever been the holder of any mortgage, pledge or other encumbrance on any
Real Estate; (iii) has ever engaged in any business, directly or indirectly,
involving the storage, treatment, generation, transportation, disposal or other
handling of any Hazardous Substance, or has ever caused or permitted any Release
of any Hazardous Substance on or from any Real Estate.

(b) AVLIC has good and valid title to all debentures, notes, stocks,
securities and other assets that are of a type required to be disclosed in
Schedules B through DB of its annual SAP Statements and that are owned by it,
free and clear of all Liens.

(c) None of the loans or other long term invested assets held by
AVLIC of the type required to be disclosed in Schedule B or BA of its annual SAP
Statements is or has been at any time since December 31, 1992 in default for
more than 60 days as to any payment of interest or principal due thereon and the
financial condition of any other party to such loan or asset is

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not so impaired as to cause a default thereunder. There is no existing
circumstance or condition with respect to any such loan or asset or any property
mortgaged or pledged as collateral for the repayment thereof that would cause
such loan to be subject to imminent default. There is no valid right of offset,
defense or counterclaim to any such loan or asset.

(d) AIC has good and marketable title to all of the assets detailed
in the AIC Statements, subject to no encumbrances, mortgages, pledges, liens or
restrictions of any type.

(e) Each of AVLIC and AIC owns good and indefeasible title to, or has
a valid leasehold interest in or has a valid right under Contract to use, all
tangible personal property that is used in the conduct of its business,
operations or affairs, free and clear of all Liens. All such tangible personal
property is, except for reasonable wear and tear, in good operating condition
and repair and is suitable for its current uses.

(f) Each of AVLIC and AIC has and, immediately after the Closing will
have, the non-exclusive right to use, after the Closing, free and clear of any
royalty or other payment obligations (other than such obligations not exceeding
$5,000 in the aggregate), claims of infringement or alleged infringement or
other Liens, (i) all marks, names, trademarks, patents, patent rights, assumed
names, logos, trade secrets, copyrights, trade names and service marks that are
used in the conduct of its business, operations or affairs, and (ii) all
material computer software, programs and similar systems owned by or licensed to
AVLIC or AIC or used in the conduct of their respective business, operations or
affairs. Neither AVLIC nor AIC is in conflict with or in violation or
infringement of, nor has ALIC, AVLIC or AIC received any notice of any claimed
conflict with, or violation or infringement of (which claimed conflict,
violation or infringement has not been resolved), any asserted rights of any
other Person with respect to any intellectual property or any material computer
software, programs or similar systems.

3.22 REGULATION. Except as disclosed in Section 3.22 of the Disclosure
Schedule (with paragraph references corresponding to those set forth below):

(a) To the Knowledge of ALIC, (i) AIC's business is being conducted
in compliance with each Law of any governmental entity, and in compliance with
the rules and regulations of the New York Stock Exchange, the American Stock
Exchange, the NASD, the Commodity Future Trading Corporation and any other stock
exchanges, commodities exchanges or self-regulatory organizations of which it is
a member on the date hereof, except for possible violations which either
singularly or in the aggregate do not have or will not have a material adverse
effect on the Business or Condition of AIC; and (ii) no investigation or review
by any

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governmental entity, securities or commodities exchange or self-regulatory
organization with respect to AIC is pending or threatened, nor has any
governmental entity, securities or commodities exchange or self-regulatory
organization indicated an intention to conduct same.

(b) Except for restrictions generally imposed by rule, regulation or
administrative policy on broker dealers generally, AIC is not under any
restriction or disqualification imposed by the New York Stock Exchange, the
NASD, the American Stock Exchange, the Commission, the Commodity Future Trading
Corporation or any other administrative agency or securities or commodities
exchange.

3.23 PURCHASE FOR INVESTMENT. The Shares to be acquired under the terms of
this Agreement will be acquired by ALIC for its own account for the purpose of
investment and not for the purpose of distribution. ALIC will refrain from
transferring or otherwise disposing of any of the Shares acquired by it, or any
interest therein, in such manner as to violate any registration provision of the
Securities Act of 1933, as amended, or of any applicable state securities Law
regulating the disposition thereof. ALIC agrees that the certificates
representing the Shares may bear legends to the effect that the Shares have not
been registered under the Securities Act of 1933, as amended, or such other
state securities Laws and that no interest therein may be transferred or
otherwise disposed of in violation of the provisions thereof.

3.24 INSURANCE ISSUED BY AVLIC. Except as disclosed in Section 3.24 of the
Disclosure Schedule (with paragraph references corresponding to those set forth
below):

(a) To the Knowledge of ALIC, no outstanding insurance or annuity
Contract issued, reinsured or underwritten by AVLIC entitles the holder thereof
or any other Person to receive dividends, distributions or other benefits based
on the revenues or earnings of AVLIC or any other Person, except to the extent
any AVLIC Variable Product provides for the policyholder to receive the
dividends or other earnings on the investment of separate account assets.

(b) All outstanding insurance and annuity Contracts issued, reinsured
or underwritten by AVLIC are, to the extent required under applicable Laws, on
forms approved by the insurance regulatory authority of the jurisdiction where
issued or have been filed with and not objected to by such authority within the
period provided for objection.

(c) The underwriting standards utilized and ratings applied by AVLIC
with respect to any insurance or annuity Contract or by AVLIC and/or ALIC
pursuant to any reinsurance, coinsurance or other similar Contract with AVLIC
conform in all

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material respects to industry accepted practices and to the standards and
ratings required pursuant to the terms of the respective reinsurance,
coinsurance or other similar Contracts.

(d) Neither ALIC nor AVLIC has received any information which would
cause it to believe that the financial condition of any other party to any
reinsurance, coinsurance or other similar Contract with AVLIC is so impaired as
to be likely to result in a default thereunder, or that any amount payable under
any such Contract is not fully collectible.

(e) To the Knowledge of ALIC, each insurance agent, at the time such
agent wrote, sold or produced business for AVLIC at any time since December 31,
1990, was duly licensed as an insurance agent for the type of business written,
sold or produced by such insurance agent in the particular jurisdiction in which
such agent wrote, sold or produced such business. To the Knowledge of ALIC, no
such insurance agent violated (or with or without notice or lapse of time, or
both, would have violated) any term or provision of any Law or any writ,
judgment, decree, injunction or similar order applicable to the writing, sale or
production of business for AVLIC, except for violations which have been cured,
which have been resolved or settled through agreements with applicable
governmental authorities or which are barred by all applicable statutes of
limitation.

3.25 [Reserved.]

3.26 LICENSES AND PERMITS. Except as disclosed in Section 3.26 of the
Disclosure Schedule (with paragraph references corresponding to those set forth
below), and to the Knowledge of ALIC:

(a) each of AVLIC and AIC owns or validly holds, or will through the
Service Agreements be entitled to the benefits or protections afforded by, all
licenses, franchises, permits, approvals, authorizations, exemptions,
classifications, certificates, registrations and similar documents or
instruments that are required for its business, operation and affairs and that
the failure to so own or hold has or would reasonably be expected to have a
material adverse effect on the Business or Condition of AVLIC or AIC; and

(b) all such licenses, franchises, permits, approvals,
authorizations, exemptions, classifications, certificates, registrations and
similar documents or instruments are valid, binding and in full force and
effect.

3.27 [Reserved.]

3.28 DISCLOSURE. Neither this Agreement nor any certificate required to be
furnished by ALIC to AML in connection with this

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Agreement or the transactions contemplated hereby contains any untrue statement
of a material fact concerning AVLIC or AIC or omits to state a material fact
concerning AVLIC or AIC necessary to make the statements herein or therein not
misleading in light of the circumstances in which they were made.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF AML

AML hereby represents and warrants to ALIC as follows:

4.1 ORGANIZATION OF AML. AML is a corporation duly organized and validly
existing under the Laws of the State of Iowa and has the requisite power and
authority to enter into this Agreement and to perform its obligations under this
Agreement. AML is duly licensed, qualified or admitted to do business in all
jurisdictions in which the failure to be so licensed, qualified or admitted,
individually or in the aggregate with other such failures, has or would
reasonably be expected to have a material adverse effect on the validity or
enforceability of this Agreement, on the ability of AML to perform its
obligations under this Agreement or on the Business or Condition of AML.

4.2 AUTHORITY OF AML. The board of directors of AML has duly and validly
approved this Agreement and the transactions contemplated hereby. The execution
and delivery of this Agreement by AML and the performance by AML of its
obligations under this Agreement have been duly and validly authorized by all
necessary action. This Agreement constitutes a valid and binding obligation of
AML and is enforceable against AML in accordance with its terms, except to the
extent that (a) enforcement may be limited by or subject to any bankruptcy,
insolvency, reorganization, moratorium or similar Laws now or hereafter in
effect relating to or limiting creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court or
other similar Person before which any proceeding therefor may be brought.

4.3 AUTHORITY FOR JOINT VENTURE. On the Closing Date, the Board of
directors of AML will have duly and validly approved the Joint Venture and the
transactions contemplated in connection therewith and hereby. On the entry into
the Joint Venture in accordance with this Agreement, the performance by AML of
its obligations in connection therewith will be duly and validly authorized by
all necessary corporate action on the part of AML.

4.4 NO CONFLICTS OR VIOLATIONS. The execution and delivery of this
Agreement by AML do not, and the performance by AML of its obligations under
this Agreement will not:

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(a) subject to obtaining the approvals contemplated by Sections 5.1
and 5.2 and Sections 6.1 and 6.2 hereof, violate any term or provision of any
Law which materially affects the business, operations or financial condition of
AML or any writ, judgment, decree, injunction or similar order applicable to
AML;

(d) conflict with or result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default under, or
give to any Person any right of termination, cancellation, acceleration or
modification in or with respect to, any Contract to which AML is a party or by
which any of its Assets and Properties may be bound; or

(e) require AML to obtain any consent, approval or action of, or make
any filing with or give any notice to, any Person except, in either case, as
contemplated in Section 6.1 or 6.2 hereof.

4.5 LITIGATION. There are no actions, suits, investigations or
proceedings against AML pending or threatened, and (to the Knowledge of AML) no
event, fact or circumstance has arisen or occurred that may reasonably be
expected to result in any action, suit, investigation or proceeding against AML
at law or in equity in, before or by any Person that individually or in the
aggregate have or would reasonably be expected to have a material adverse effect
on the validity or enforceability of this Agreement or on the ability of AML to
perform its obligations under this Agreement.

4.6 PURCHASE FOR INVESTMENT. The Shares to be acquired under the terms of
this Agreement will be acquired by AML for its own account for the purpose of
investment and not for the purpose of distribution. AML will refrain from
transferring or otherwise disposing of any of the Shares acquired by it, or any
interest therein, in such manner as to violate any registration provision of the
Securities Act of 1933, as amended, or of any applicable state securities Law
regulating the disposition thereof. AML agrees that the certificates
representing the Shares may bear legends to the effect that the Shares have not
been registered under the Securities Act of 1933, as amended, or such other
state securities Laws and that no interest therein may be transferred or
otherwise disposed of in violation of the provisions thereof.

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4.7 DISCLOSURE. Neither this Agreement nor any certificate required to be
furnished by AML to ALIC in connection with this Agreement or the transactions
contemplated hereby contains any untrue statement of a material fact concerning
AML or omits to state a material fact concerning AML necessary to make the
statements herein or therein not misleading in light of the circumstances in
which they were made.

ARTICLE V

COVENANTS OF ALIC

ALIC covenants and agrees with AML that, at all times after the date hereof
and before the Closing (or, with respect to the provisions of Section 5.16
hereof, both before and after the Closing Date), ALIC will comply with all
covenants and provisions of this Article V, except to the extent AML may
otherwise consent in writing, or to the extent otherwise required or permitted
by this Agreement.

5.1 REGULATORY APPROVALS. ALIC will, and will cause AVLIC and AIC to, (a)
take all commercially reasonable steps necessary or desirable, and proceed
diligently and in good faith and use all commercially reasonable efforts to
obtain, as promptly as practicable, all approvals required by any applicable
Contract of ALIC or AVLIC or AIC, (b) take all commercially reasonable steps
necessary or desirable, and proceed diligently and in good faith and use all
commercially reasonable efforts to obtain, as promptly as practicable, all
approvals, authorizations and clearances of governmental and regulatory
authorities required for ALIC, AVLIC or AIC to permit ALIC to consummate the
transactions contemplated hereby, (c) provide such other information and
communications to such governmental and regulatory authorities as AML or such
authorities may reasonably request, and (d) cooperate with AML in obtaining, as
promptly as practicable, all approvals, authorizations and clearances of
governmental or regulatory authorities and others required for AML to consummate
the transactions contemplated hereby, including without limitation any required
approvals of the insurance regulatory authorities in the State of Nebraska.

5.2 HSR FILINGS. ALIC will, and will cause its Affiliates to, (a) take
promptly all actions necessary to make the filings required of ALIC or its
Affiliates under the HSR Act, (b) comply at the earliest practicable date with
any request for additional information received by ALIC or its Affiliates from
the Federal Trade Commission or Antitrust Division of the Department of Justice
pursuant to the HSR Act, (c) cooperate with AML in connection with AML's filings
under the HSR Act, and (d) request early termination of the applicable waiting
period.

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5.3 INVESTIGATION BY AML. ALIC will provide, and will cause AVLIC and AIC
to provide, (a) AML and its counsel, accountants, actuaries and other
representatives with access, upon reasonable notice and during normal business
hours, to all facilities, officers, employees, agents, accountants, actuaries,
Assets and Properties, and Books and Records of AVLIC and AIC and will furnish
AML and such other Persons during such period with all such information and data
(including without limitation copies of or information concerning all material
Contracts, Benefit Plans, market conduct and financial examinations, Tax
records, insurance coverage and other Books and Records) concerning the
business, operations and affairs of AVLIC and AIC, and all such additional
information and data with respect to the Tax records and Benefit Plans of ALIC,
as AML or any of such other Persons reasonably may request and (b) AML with
notice of and full access to all meetings (and all actions by written consent in
lieu thereof) of the respective boards of directors and stockholders of AVLIC
and AIC involving matters which are not in the ordinary course of business and
consistent with past practice of AVLIC or AIC, except such meetings as involve
only matters related to the consummation of the transactions contemplated
herein.

5.4 NO NEGOTIATIONS, ETC. ALIC will not take, and will not permit AVLIC
or AIC or any other Affiliate of ALIC (or permit any other Person acting for or
on behalf of any of them) to take, directly or indirectly, any action, except as
permitted or required by this Agreement, (a) to seek or encourage any offer or
proposal from any Person to acquire any shares of capital stock or any other
securities of AVLIC or AIC or any interests therein or Assets and Properties
thereof or interests therein, (b) to merge, consolidate or combine, or to permit
any other Person to merge, consolidate or combine, with AVLIC or AIC, (c) in the
case of AVLIC or AIC, to acquire or agree to acquire blocks of business or all
or substantially all the Assets and Properties or capital stock or other equity
securities of any other Person, (d) to liquidate, dissolve or reorganize AVLIC
or AIC, (e) to acquire or transfer any Assets and Properties of AVLIC or AIC or
any interests therein, except as contemplated by the terms of this Agreement,
(f) to reach any agreement or understanding (whether or not such agreement or
understanding is absolute, revocable, contingent or conditional) for, or
otherwise to attempt to consummate, any such acquisition, transfer, merger,
consolidation, combination or reorganization with respect to AVLIC or AIC, (g)
to furnish or cause to be furnished any information with respect to AVLIC or AIC
to any Person (other than AML or as provided in Section 5.3) that ALIC, AVLIC or
AIC, or any other Affiliate of ALIC (or any Person acting for or on behalf of
any of them) knows or has reason to believe is in the process of attempting or
considering any such acquisition, transfer, merger, consolidation, combination,
liquidation, dissolution or reorganization with respect to AVLIC or AIC, or (h)
to enter into any other commitment (with respect to AVLIC or

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AIC or otherwise) which would have a material adverse effect on ALIC's ability
to perform its obligations under this Agreement. If ALIC, AVLIC or AIC, or any
other Affiliate of ALIC, receives from any Person (other than AML) any offer,
proposal or informational request that is subject to this Section 5.4, ALIC will
promptly advise such Person, by written notice, of the terms of this Section 5.4
and will promptly deliver a copy of such notice to AML. Nothing herein shall
prohibit ALIC from acquiring the Shares of AIC as agreed pursuant to Section 3.6
hereof.

5.5 CONDUCT OF BUSINESS. ALIC will cause AVLIC and AIC to conduct their
business (including, without limitation, relationships with policyholders,
agents and service providers, conduct of marketing efforts, compliance with
Laws, maintenance of Books and Records and maintenance of licenses and
regulatory approvals) only in the ordinary course of business and consistent
with past practice, except as otherwise provided in this Agreement or except as
AML may otherwise consent in writing.

5.6 FINANCIAL STATEMENTS AND REPORTS.

(a) As promptly as practicable (i.e., whether before or after the
Closing Date) after each calendar quarter or year ending after the third quarter
of 1995 and before the Closing Date, ALIC will deliver to AML true and complete
copies of the following:

(1) the SAP Statement filed by AVLIC for each quarter or year
then ended and each quarterly or annual GAAP Statement of AIC or AVLIC;

(2) presentations for AVLIC reflecting, as of the end of each
such quarter, the information of the type required by the line items set forth
on pages 2, 3, 4, 5, 8, 9, 12, 13 and 13.1 and on Schedules A through DB and S
of the Annual Statement of AVLIC (and the corresponding pages and Schedules of
the Annual Statement of AVLIC's separate account), which presentations shall be
prepared in accordance with SAP and will present fairly, in all material
respects, the admitted assets, Liabilities and capital and surplus of AVLIC as
of the date thereof and its results of operations and cash flows for and during
the respective periods covered thereby;

(3) with respect to the year ending on December 31, 1995,
audited GAAP Statements with respect to AVLIC and AIC; and

(4) with respect to the quarter ending on March 31, 1996,
Verified unaudited GAAP Statements with respect to AVLIC and AIC.

(b) As promptly as practicable, ALIC will deliver to AML true and
complete copies of such other material financial

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statements, reports or analyses as may be prepared or received by ALIC, or any
other Affiliate of ALIC (other than AVLIC or AIC) and as relate to any of the
business, operations or affairs of AVLIC or AIC, including without limitation
normal internal reports which AVLIC or AIC prepares (such as those reflecting
monthly premiums, claims and cash flow) and special reports (such as those of
financial consultants).

5.7 EMPLOYEE AND AGENT MATTERS. ALIC will cause AVLIC and AIC to refrain
from directly or indirectly, without the consent of AML:

(1) hiring, employing, engaging, recruiting, or otherwise taking
on any employee other than in the ordinary course of business;

(2) adopting, entering into, amending, altering or terminating,
partially or completely, any agency, consultation or representation Contract,
other than in the ordinary course of business and in accordance with past
practice, that is, or had it been in existence on the date of this Agreement
would have been, required to be disclosed pursuant to Section 5.3 hereof;

(3) entering into, other than in the ordinary course of business
and in accordance with past practice, any Contract with any AVLIC or AIC
Representative that is not terminable by AVLIC or AIC, without penalty or other
Liability, upon not more than 30 calendar days' notice.

5.8 NO CHARTER AMENDMENTS. ALIC will cause each of AVLIC and AIC to
refrain from amending its articles or certificate of incorporation or by-laws
and from taking any action with respect to any such amendment.

5.9 NO ISSUANCE OF SECURITIES. ALIC will cause each of AVLIC and AIC to
refrain from authorizing or issuing any shares of its capital stock or other
equity securities or entering into any Contract or granting any option, warrant
or right calling for the authorization or issuance of any such shares or other
equity securities, or creating or issuing any securities directly or indirectly
convertible into or exchangeable for any such shares or other equity securities,
or issuing any options, warrants or rights to purchase any such convertible
securities.

5.10 NO DIVIDENDS. Except as set forth in Section 5.10 of the Disclosure
Schedule or except as ALIC otherwise informs AML, ALIC will cause each of AVLIC
and AIC to refrain from declaring, setting aside or paying any dividend or other
distribution in respect of its capital stock and from directly or indirectly
redeeming, purchasing or otherwise acquiring any of its capital stock or any
interest in or right to acquire any such stock.

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5.11 NO DISPOSAL OF PROPERTY. Except as set forth in Section 5.11 of the
Disclosure Schedule or as otherwise expressly provided in this Agreement, ALIC
will cause each of AVLIC and AIC to refrain from (a) disposing of any of its
Assets and Properties and from permitting any of its Assets and Properties to be
subjected to any Liens, except to the extent any such disposition or any such
Lien is made or incurred in the ordinary course of business and consistent with
past practice, (b) selling any material part of its insurance products,
operations or business to any Third Party (other than sales of insurance
products in the ordinary course of business consistent with past practice), (c)
entering into any Contracts obligating it to administer the insurance operations
of any other Person and (d) entering into any Contracts permitting any other
Person to administer its insurance operations.

5.12 NO BREACH OR DEFAULT. ALIC will cause each of AVLIC and AIC to
refrain from violating, breaching or defaulting, and from taking or failing to
take any action that (with or without notice or lapse of time or both) would
constitute a material violation, breach or default, in any way under any term or
provision of any Contract to which it is a party or by which any of its Assets
and Properties is or may be bound.

5.13 NO INDEBTEDNESS. Except in the ordinary course of business and
consistent with past practice and except for existing contractual obligations,
ALIC will cause AVLIC and AIC to refrain from creating, incurring, assuming,
guaranteeing or otherwise becoming liable for, and from canceling, paying,
agreeing to cancel or pay, or otherwise providing for a complete or partial
discharge in advance of a scheduled payment date with respect to, any Liability,
and from waiving any right to receive any direct or indirect payment or other
benefit under any Liability owing to it.

5.14 [Reserved.]

5.15 INTERCOMPANY LIABILITIES. At or prior to the Closing, all existing
Intercompany Liabilities owed by or to AVLIC or AIC shall have been paid or
accrued. Each Contract of AVLIC or AIC which shall remain in effect after the
Closing Date and, upon performance by any party thereto, give rise to any
Intercompany Liability shall be in writing, shall have been provided to AML
pursuant to Section 5.3 hereof, and shall be described in Section 5.15 of the
Disclosure Schedule.

5.16 TAX MATTERS. ALIC will refrain and will cause each of AVLIC and AIC
to refrain from making, filing, or entering into (whether before or after the
Closing) any election, consent or agreement with respect to any Tax matters
which would have any effect on AVLIC, AIC or any of their respective Assets and
Properties for any Tax period ending after the Closing Date.

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5.17 DISCLOSURE SCHEDULE. ALIC shall deliver the Disclosure Schedule to
AML within 12 days after the date of this Agreement. Any matter disclosed under
one Section of the Disclosure Schedule shall be considered to be disclosed under
all other applicable Sections of the Disclosure Schedule from which it is
inadvertently omitted and, to the extent AML has actual knowledge of (or obtains
information sufficient to cause a reasonable person to make further inquiry with
respect to) any matter required to be disclosed by ALIC or its Affiliates
hereunder, such matter shall be deemed disclosed (but only to the extent of such
actual knowledge or such further reasonable inquiry).

5.18 NOTICE AND CURE. ALIC will notify AML promptly in writing of, and
contemporaneously will provide AML with true and complete copies of any and all
information or documents relating to, and will use all commercially reasonable
efforts to cure before the Closing, any event, transaction or circumstance
occurring after the date of this Agreement that causes or will cause any
covenant or agreement of ALIC under this Agreement to be breached, or that
renders or will render untrue any representation or warranty of ALIC contained
in this Agreement as if the same were made on or as of the date of such event,
transaction or circumstance. ALIC also will use all commercially reasonable
efforts to cure, before the Closing, any violation or breach of any
representation, warranty, covenant or agreement made by it in this Agreement,
whether occurring or arising before or after the date of this Agreement.

ARTICLE VI

COVENANTS OF AML

AML covenants and agrees with ALIC that, at all times after the date hereof
and before the Closing, AML will comply with all covenants and provisions of
this Article VI, except to the extent ALIC may otherwise consent in writing, or
to the extent otherwise required or permitted by this Agreement.

6.1 REGULATORY APPROVALS. AML will (a) take all commercially reasonable
steps necessary or desirable, and proceed diligently and in good faith and use
all commercially reasonable efforts to obtain, as promptly as practicable, all
approvals, authorizations and clearances of governmental and regulatory
authorities required of AML to consummate the transactions contemplated hereby,
including without limitation any required approvals of the insurance regulatory
authorities in the State of Nebraska, including but not limited to the approval
of the Director of Insurance for the State of Nebraska of AML's Statement; (b)
provide such other information and communications to such governmental and
regulatory authorities as ALIC or such authorities may reasonably request, and
(c) cooperate with ALIC, AVLIC and AIC in obtaining, as promptly as practicable,
all

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approvals, authorizations and clearances of governmental or regulatory
authorities required of ALIC, AVLIC or AIC to consummate the transactions
contemplated hereby.

6.2 HSR FILINGS. AML will (a) take promptly all actions necessary to make
the filings required of AML under the HSR Act, (b) comply at the earliest
practicable date with any request for additional information received by AML
from the Federal Trade Commission or Antitrust Division of the Department of
Justice pursuant to the HSR Act, (c) cooperate with ALIC in connection with
ALIC's filings under the HSR Act, and (d) request early termination of the
applicable waiting period.

6.3 INVESTIGATION BY ALIC. AML will provide ALIC and its counsel,
accountants, actuaries and other representatives with access, upon reasonable
notice and during normal business hours, to its facilities, officers, employees,
agents, accountants, actuaries, Assets and Properties, and Books and Records and
will furnish ALIC and such other Persons during such period with all such
information and data (including without limitation copies of Contracts and other
Books and Records) concerning AML's Distribution Force and the operation of its
Fixed Annuity business as ALIC or any of such other Persons reasonably may
request.

6.4 NO NEGOTIATIONS, ETC. AML will not take, and will not permit any
Affiliate of AML (or permit any other Person acting for or on behalf of any of
them) to take, directly or indirectly, any action, except as permitted or
required by this Agreement, (a) to seek or encourage any offer or proposal from
any Person by which AML or any Affiliate thereof would acquire a controlling
interest in any Person whose primary business is variable life insurance, (b) to
reach any agreement or understanding (whether or not such agreement or
understanding is absolute, revocable, contingent or conditional) for, or
otherwise to attempt to consummate, any such acquisition, transfer, merger,
consolidation, combination or reorganization, or (c) to enter into any other
commitment which would have a material adverse effect on AML's ability to
perform its obligations under this Agreement.

6.5 NOTICE AND CURE. AML will notify ALIC promptly in writing of, and
contemporaneously will provide ALIC with true and complete copies of any and all
information or documents relating to, and will use all commercially reasonable
efforts to cure before the Closing, any event, transaction or circumstance
occurring after the date of this Agreement that causes or will cause any
covenant or agreement of AML under this Agreement to be breached, or that
renders or will render untrue any representation or warranty of AML contained in
this Agreement as if the same were made on or as of the date of such event,
transaction or circumstance. AML also will use all commercially reasonable
efforts to cure, before the Closing, any violation or

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breach of any representation, warranty, covenant or agreement made by it in this
Agreement, whether occurring or arising before or after the date of this
Agreement.

ARTICLE VII

CONDITIONS TO OBLIGATIONS OF AML

The obligations of AML hereunder are subject to the fulfillment, at or
before the Closing, of each of the following conditions (all or any of which may
be waived in whole or in part by AML in its sole discretion).

7.1 REPRESENTATIONS AND WARRANTIES. On and as of the Closing Date there
shall not exist any breaches of representations and warranties made by ALIC in
this Agreement (which representations and warranties shall be deemed restated
and made on and as of the Closing Date), which breaches individually or in the
aggregate have or would reasonably be expected to have a material adverse effect
on the Business and Condition of AVLIC or AIC.

7.2 PERFORMANCE. ALIC shall have performed and complied in all material
respects with all agreements, covenants, obligations and conditions required by
this Agreement to be so performed or complied with by ALIC at or before the
Closing, including those specifically referred to elsewhere in this Article VII.

7.3 OFFICER'S CERTIFICATES. ALIC shall have delivered to AML a
certificate, dated the Closing Date in form reasonably acceptable to AML and
executed by the chief executive officer or chief financial officer of ALIC,
certifying (with respect to ALIC and, as appropriate, AVLIC and AIC) as to the
fulfillment of the conditions set forth in Sections 7.1, 7.2, 7.4, 7.5, 7.6, 7.8
and 8.7 hereof. In addition, ALIC shall have delivered to AML a certificate,
dated the Closing Date and executed by the secretary or any assistant secretary
of ALIC, certifying that ALIC has duly and validly taken all corporate action
necessary to authorize its execution and delivery of this Agreement and its
performance of its obligations under this Agreement and that the resolutions
(true and complete copies of which shall be attached to the certificate) of the
board of directors of ALIC with respect to this Agreement and the transactions
contemplated hereby have been duly and validly adopted and are in full force and
effect.

7.4 HSR ACT APPROVAL. All waiting periods applicable to this Agreement
and the transactions contemplated hereby under the HSR Act shall have expired or
been waived.

7.5 NO INJUNCTION. There shall not be in effect on the Closing Date any
writ, judgment, injunction, decree or similar order of any court or similar
Person restraining, enjoining or

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otherwise preventing consummation of any of the transactions contemplated by
this Agreement.

7.6 NO PROCEEDING OR LITIGATION. There shall not be instituted, pending
or (to the Knowledge of AML) threatened any action, suit, investigation or other
proceeding in, before or by any court, governmental or regulatory authority or
other Person to restrain, enjoin or otherwise prevent consummation of any of the
transactions contemplated by this Agreement or to recover any Damages or obtain
other relief as a result of this Agreement or any of the transactions
contemplated hereby or as a result of any Contract entered into in connection
with or as a condition precedent to the consummation hereof, which action, suit,
investigation or other proceeding would, in the opinion of AML, result in a
decision, ruling or finding that individually or in the aggregate has or would
reasonably be expected to have a material adverse effect on the validity or
enforceability of this Agreement, on the ability of ALIC or AML to perform its
obligations under this Agreement, or on the Business or Condition of AVLIC or
AIC. There shall not be in effect on the Closing Date any voluntary or
involuntary bankruptcy, receivership, conservatorship or similar proceeding with
respect to any one or more of AVLIC, AIC or ALIC.

7.7 CONSENTS, AUTHORIZATIONS, ETC. All orders, consents, permits,
authorizations, approvals and waivers of every Person necessary to permit AML to
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby and to permit AML to acquire its interest in the Joint
Venture pursuant to this Agreement (including without limitation any requisite
action of the insurance regulatory authorities in the State of Nebraska, in each
case without the abrogation or diminishment of the authority or license of AVLIC
or AIC or the imposition of significant restrictions upon the transactions
contemplated hereby) shall have been obtained and shall be in full force and
effect. The aforesaid consents include but are not limited to the written
approval of the Director of Insurance for the State of Nebraska of AML's
Statement, which approval shall provide AML with the right to enter into the
transactions contemplated in this Agreement and to exercise the Option and to
become the purchaser of all of the Shares of Holding Company at any Auction or
Unilateral Auction conducted in accordance with this Agreement or any related
Contract, all without further action of the Nebraska Director of Insurance.

7.8 NO ADVERSE CHANGE. Except (i) as disclosed in Section 3.12 of the
Disclosure Schedule or in the notes to the December 31, 1994 SAP Statements,
(ii) for changes or developments relating to the conduct of the business of
AVLIC or AIC after the date of this Agreement in conformity with the requests of
AML or as otherwise provided for in this Agreement, or (iii) for changes
affecting life insurance companies in general which do not have a material
adverse effect on the Business or Condition of AVLIC or

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AIC, since December 31, 1994, there shall not have been, occurred or arisen any
change, event (including without limitation any damage, destruction or loss
whether or not covered by insurance), condition or state of facts of any
character that individually or in the aggregate has or would reasonably be
expected to have a material adverse effect on the Business or Condition of AVLIC
or AIC.

7.9 CONTRACTS. ALIC shall have provided AML with copies or access to the
originals of all material Contracts to which AVLIC and AIC is a party or by
which it or its Assets and Properties are bound, including all reinsurance,
coinsurance or other similar Contracts, and AML shall have determined in its
reasonable discretion that such Contracts which will remain in force as of the
Closing Date are satisfactory as to form and substance. Except as otherwise
identified by ALIC, each such material Contract is in full force and effect and
constitutes a valid, binding and enforceable obligation of AVLIC or AIC and, to
the Knowledge of ALIC, of each other Person that is a party thereto in
accordance with its terms subject to equitable rights and the rights of
creditors, and neither AVLIC, AIC nor, to the Knowledge of ALIC, any other
Person who is a party to such Contract has materially breached or defaulted
under any such Contract.

7.10 EXAMINATIONS. ALIC shall have provided AML with copies or access to
the originals of the two most recent market conduct and financial examinations
of AVLIC issued by any insurance regulatory authority, and AML shall have
determined in its reasonable discretion that the matters addressed in such
examinations have been resolved to the satisfaction of all applicable insurance
regulatory authorities.

7.11 OPINION OF COUNSEL. ALIC shall have delivered to AML the opinion, in
form and substance reasonably acceptable to AML, dated the Closing Date, of
Norman M. Krivosha, Corporate General Counsel of ALIC, confirming and opining as
to (i) the representations set forth in Sections 3.1 through 3.7, 3.10, 3.18 and
3.19 hereof; (ii) satisfaction of the covenants set forth in Section 5.1 hereof;
and (iii) satisfaction of the conditions set forth in Sections 8.4 through 8.7
hereof.

ARTICLE VIII

CONDITIONS TO OBLIGATIONS OF ALIC

The obligations of ALIC hereunder are subject to the fulfillment, at or
before the Closing, of each of the following conditions (all or any of which may
be waived in whole or in part by ALIC in its sole discretion).

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8.1 REPRESENTATIONS AND WARRANTIES. On and as of the Closing Date there
shall not exist any breaches of representations and warranties made by AML in
this Agreement (which representations and warranties shall be deemed restated
and made on and as of the Closing Date), which breaches individually or in the
aggregate have or would reasonably be expected to have a material adverse effect
on the Business and Condition of AVLIC or AIC.

8.2 PERFORMANCE. AML shall have performed and complied in all material
respects with all agreements, covenants, obligations and conditions required by
this Agreement to be so performed or complied with by AML at or before the
Closing, including those specifically referred to elsewhere in this Article
VIII.

8.3 OFFICER'S CERTIFICATES. AML shall have delivered to ALIC a
certificate, dated the Closing Date in form reasonably acceptable to ALIC and
executed by the chief executive officer or the chief financial officer of AML,
certifying the fulfillment of the conditions set forth in Sections 7.7, 8.1,
8.2, 8.4, 8.5 and 8.6 hereof. In addition, AML shall have delivered to ALIC a
certificate, dated the Closing Date and executed by the secretary or any
assistant secretary of AML certifying (as appropriate) that AML has duly and
validly taken all action necessary to authorize its execution and delivery of
this Agreement and its performance of its obligations under this Agreement, and
that the resolutions (true and complete copies of which shall be attached to the
certificate) of the board of directors of AML with respect to this Agreement and
the transactions contemplated hereby have been duly and validly adopted and are
in full force and effect.

8.4 HSR ACT APPROVAL. All waiting periods applicable to this Agreement
and the transactions contemplated hereby under the HSR Act shall have expired or
been waived.

8.5 NO INJUNCTION. There shall not be in effect on the Closing Date any
writ, judgment, injunction, decree or similar order of any court or similar
Person restraining, enjoining or otherwise preventing consummation of any of the
transactions contemplated by this Agreement.

8.6 NO PROCEEDING OR LITIGATION. There shall not be instituted, pending
or (to the Knowledge of ALIC) threatened any action, suit, investigation or
other proceeding in, before or by any court, governmental or regulatory
authority, or other Person, to restrain, enjoin or otherwise prevent
consummation of any of the transactions contemplated by this Agreement or to
recover any Damages or obtain other relief as a result of this Agreement or any
of the transactions contemplated hereby or as a result of any Contract entered
into in connection with or as a condition precedent to the consummation hereof,
which action, suit, investigation or other proceeding may, in the opinion of
ALIC, result in a decision, ruling or finding that individually or in

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the aggregate has or would reasonably be expected to have a material adverse
effect on the validity or enforceability of this Agreement or on the ability of
AML or ALIC to perform its obligations under this Agreement. There shall not be
in effect on the Closing Date any voluntary or involuntary bankruptcy,
receivership, conservatorship or similar proceeding with respect to AML.

8.7 CONSENTS, AUTHORIZATIONS, ETC. All orders, consents, permits,
authorizations, approvals and waivers of every Person necessary to permit ALIC
to perform its obligations under this Agreement and to consummate the
transactions contemplated hereby shall have been obtained and shall be in full
force and effect.

8.8 EXAMINATIONS. AML shall have provided ALIC with copies or access to
the originals of the two most recent market conduct and financial examinations
of AML issued by any insurance regulatory authority, and ALIC shall have
determined in its reasonable discretion that the matters addressed in such
examinations have been resolved to the satisfaction of all applicable insurance
regulatory authorities.

8.9 OPINION OF COUNSEL. AML shall have delivered to ALIC the legal
opinion, in form and substance reasonably acceptable to ALIC, dated the Closing
Date, of Joseph K. Haggerty, General Counsel of AML, confirming and opining as
to (i) the representations set forth in Sections 4.1 through 4.4 hereof; (ii)
satisfaction of the covenants set forth in Section 6.1 hereof; and (iii)
satisfaction of the conditions set forth in Sections 7.4 through 7.7 hereof.

ARTICLE IX

SURVIVAL OF PROVISIONS; REMEDIES

9.1 SURVIVAL. Without limiting any other provision of this Agreement, the
representations, warranties, covenants and agreements respectively required to
be made by ALIC and AML in this Agreement, or in any certificate, respectively,
delivered by ALIC or AML pursuant to Section 7.3 or Section 8.3 hereof will
survive the Closing:

(a) until the expiration of all applicable statutes of limitations
(including all periods of extension, whether automatic or permissive) in the
case of (i) the representations and warranties of ALIC respectively set forth in
Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.20 and 3.21(a) hereof, (ii) the
representations and warranties of AML set forth in Sections 4.1, 4.2 and 4.5
hereof, and (iii) the indemnification agreements respectively set forth in
Sections 10.1, 10.2 and, to the extent necessary to enforce the representations
and warranties listed in clause (i) of this subparagraph (a), 10.3 hereof; and

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(b) until December 31, 1998 in the case of all other representations,
warranties, covenants and agreements, except that covenants and agreements to be
performed after the Closing will survive the Closing in accordance with their
terms.

If a notice of any matter or claim as to which indemnity is sought hereunder is
given before expiration of the applicable time period referenced above, then
(notwithstanding such expiration) the representation, warranty, covenant or
agreement applicable to such claim shall survive until, but only for purposes
of, resolution of such claim.

9.2 AVAILABLE REMEDIES. Each party expressly agrees that, consistent with
its intention and agreement to be bound by the terms of this Agreement and to
consummate the transactions contemplated hereby, subject only to the performance
or satisfaction of precedent conditions or of precedent requirements imposed
upon another party hereto, the remedy of specific performance shall be available
to a non-breaching and non-defaulting party to enforce performance of this
Agreement by a breaching or defaulting party, including, without limitation, to
require the consummation of the Closing on the Closing Date. The rights and
remedies provided for in this Agreement are cumulative and are not exclusive of
any rights or remedies that any party may otherwise have at law or in equity;
PROVIDED, HOWEVER, that except as otherwise provided in this Agreement after
Closing the sole and exclusive remedies of any party hereto with respect to all
claims for Damages arising out of any claimed breach of this Agreement shall be
as provided in Article X hereof. The rights and remedies of any party based
upon, arising out of or otherwise in respect of any breach of any
representation, warranty, covenant or agreement contained in this Agreement
shall in no way be limited by the fact that the act, omission, occurrence or
other state of facts upon which any claim of any such breach is based may also
be the subject matter of any other representation, warranty, covenant or
agreement contained in this Agreement (or in any other agreement between the
parties) as to which there is no breach.

9.3 SURVIVAL OF JOINT VENTURE PROVISIONS. Notwithstanding anything to the
contrary in this Article IX, the entirety of Article II hereof (and of Articles
XII and XIII as provided therein) shall survive the Closing and be effective
according to their terms.

ARTICLE X

INDEMNIFICATION

10.1 SPECIAL INDEMNIFICATION. The parties acknowledge that ALIC is unable
to make affirmative representations and warranties as to certain tax matters and
other matters addressed in this

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Section 10.1, although it has no knowledge that such representations are not
true and correct. However, the parties have agreed that, except for the items
disclosed in Section 10.1(b) of the Disclosure Schedule (which, if disclosed,
shall relieve ALIC from any liability therefor), ALIC shall make certain
indemnifications with respect to such matters, as provided in this Section 10.1.

(a) If any statement in Section 10.1(b) is not true and correct, and
if any of AVLIC, AIC, Holding Company or AML incur any Liabilities or Damages
which would not have been incurred if such statement had been true and correct,
then:

1) If a director, officer, manager or supervisor of ALIC, AVLIC
or AIC had actual knowledge, at or prior to the Closing
Date, that such statement was not true and correct, then
ALIC shall pay, and shall indemnify AVLIC, AIC, Holding
Company and AML in respect of, and hold each of them
harmless against, any and all such Liabilities and Damages.

2) If no director, officer, manager or supervisor of ALIC,
AVLIC or AIC had the actual knowledge described in the
foregoing paragaph, then ALIC shall pay, and shall indemnify
AVLIC, AIC, Holding Company and AML in respect of, and hold
each of them harmless against, any and all such Liabilities
and Damages, but only to the extent that the cumulative
total of all such Liabilities and Damages exceeds, in the
aggregate, $5,000,000.

It is understood and agreed that, to the extent that any Tax payment, deduction
or other calculation involves a Tax benefit to AVLIC or AIC which is
subsequently delayed but the benefit of which will ultimately be realized in
full, the Liability or Damage associated therewith which is indemnified
hereunder shall include only the time value of the amount of the benefit
delayed.

(b) The following statements are set forth solely for the purposes of
this Section 10.1, as explained above, and are not intended to serve as
representations or warranties of any party. Each of these statements shall be
deemed made as of the date of this Agreement and restated as of the Closing
Date:

(1) Except as set forth in Section 10.1(b)(1) of the Disclosure
Schedule, for all Tax periods ending on or prior to the Closing Date, each of
AVLIC and AIC, or ALIC on behalf of or with respect to AVLIC and/or AIC, has
within the time and manner prescribed by Law paid all Taxes that are due and
payable and has established reserves on the respective GAAP books of

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AVLIC or AIC which are adequate for the full payment of all Taxes of AVLIC or
AIC which are not yet due and payable or which may otherwise be determined after
Closing to have been due.

(2) Except as set forth in Section 10.1(b)(2) of the Disclosure
Schedule, at the Closing, neither AVLIC nor AIC shall be a party to or be bound
by any Tax sharing Contract or arrangement which shall have any effect on AVLIC
or AIC for any Tax period after the Closing Date.

(3) Except as set forth in Section 10.1(b)(3) of the Disclosure
Schedule, from and after Closing, AVLIC and AIC shall not have any obligation
with respect to any period ending on or prior to the Closing Date for any Taxes
of any Person other than AVLIC or AIC.

(4) Except as set forth in Section 10.1(b)(4) of the Disclosure
Schedule, AVLIC and AIC shall not, for any reason other than a change after the
Closing Date in applicable Tax Laws, suffer, for any Tax period beginning after
the Closing Date, any reduction, elimination or other unavailability of any
deductions or other Tax benefits which are on the financial statements of AVLIC
and/or AIC as of December 31, 1995.

(5) Except as set forth in Section 10.1(b)(5) of the Disclosure
Schedule, the tax treatment under the Code of all insurance, annuity or
investment policies, plans or contracts; all financial products, employee
benefit plans, individual retirement accounts or annuities; and any similar or
related policy, contract, plan or product, whether individual, group or
otherwise, issued or sold by AVLIC, is and at all times has been in all material
respects the same or more favorable to the purchaser, policyholder or intended
beneficiaries thereof as the tax treatment under the Code for which such
contracts qualified or purported to qualify at the time of its issuance or
purchase, except for changes resulting from changes to the Code effective after
the date of such issuance or purchase. For purposes of this Section 10.1(b),
the provisions of the Code relating to the tax treatment of such Contracts shall
include, but not be limited to, Sections 72, 79, 89, 101, 104, 105, 106, 125,
130, 401, 402, 403, 404, 408, 412, 415, 419, 419A, 457, 501, 505, 817, 818, 7702
and 7702A of the Code.

(6) Except as set forth in Section 10.1(b)(6) of the Disclosure
Schedule, AVLIC neither offers nor sells any pension, profit sharing, defined
benefit, Code Section 401(k) and other retirement or employee benefit plan or
Contract (including, but not limited to, simplified employee pension plans, Code
Section 403(a), (b) and (c) annuities, Keogh plans and individual retirement
accounts and annuities) to, or for the benefit of any employees of, any other
Person; and neither AVLIC nor AIC provides administrative or other contractual
services for any

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such plan or Contract, including, but not limited to, any Third Party
administrative services for any Benefit Plan.

10.2 BENEFIT PLAN INDEMNIFICATION. ALIC agrees to indemnify AVLIC, AIC,
Holding Company and/or AML in respect of, and hold each of them harmless
against, any and all Damages resulting from or relating to any Benefit Plan to
which AVLIC and/or AIC was a party at any time prior to the Closing Date.

10.3 OTHER INDEMNIFICATION.

(a) Subject to the provisions of Article IX and Sections 10.1 and
10.2 hereof, ALIC agrees to indemnify AVLIC, AIC, Holding Company and/or AML in
respect of and hold each of them harmless against any and all Damages resulting
from or relating to any misrepresentation, breach of warranty or failure to
perform any covenant or agreement on the part of ALIC made as a part of or
contained in this Agreement, or any certificate delivered by or for ALIC
pursuant to Section 7.3 hereof. Notwithstanding anything to the contrary in
this Section 10.3(a), ALIC shall not have any liability for any Damages under
this Section 10.3(a), except for Damages resulting from or relating to any
misrepresentation or breach of warranty contained in Section 3.6, 3.20 or
3.21(a) or any nonfulfillment of or failure to perform any covenant or agreement
on the part of ALIC contained in Article V of this Agreement or any certificate
delivered by or for ALIC in connection therewith, until and unless the
cumulative total of such Damages exceeds in the aggregate $50,000, it being
understood that after such Damages exceed in the aggregate $50,000, ALIC shall
be liable to AML for all such Damages including such $50,000; PROVIDED, HOWEVER,
that the limitations of this sentence shall not apply to any Damages resulting
from ALIC's intentional, willful or reckless misrepresentations or breaches of
covenants or agreements made as a part of or contained in this Agreement.

(b) Subject to the provisions of Article IX, AML agrees to indemnify
AVLIC, AIC, Holding Company and/or ALIC in respect of, and hold ALIC harmless
against, any and all Damages resulting from or relating to any
misrepresentation, breach of warranty or nonfulfillment of or failure to perform
any covenant or agreement on the part of AML made as a part of or contained in
this Agreement or any certificate delivered by or for AML pursuant to Section
8.3 hereof. Notwithstanding anything to the contrary in this Section 10.3(b),
AML shall not have any liability for any Damages under this Section 10.3(b),
except for any nonfulfillment of or failure to perform any covenant or agreement
on the part of AML contained in Article V of this Agreement or any certificate
delivered by or for AML in connection therewith, until and unless the cumulative
total of such Damages exceeds in the aggregate $50,000, it being understood that
after such Damages exceed in the aggregate $50,000, AML shall be liable to ALIC
for all such Damages

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including such $50,000; PROVIDED, HOWEVER, that the limitations of this sentence
shall not apply to any Damages resulting from AML's intentional, willful or
reckless misrepresentations or breaches of covenants or agreements made as a
part of or contained in this Agreement.

ARTICLE XI

TERMINATION

11.1 TERMINATION. Prior to the Closing, this Agreement may be terminated,
and the transactions contemplated hereby may be abandoned, upon notice by the
terminating party to the other party:

(a) at any time before the Closing, by mutual written agreement of
ALIC and AML;

(b) by either party if the parties do not agree within 14 days of the
date hereof upon the terms of the Service Agreement to be attached hereto as
Exhibit G (which agreement shall be evidenced by the initials of a duly
authorized representative of each of the parties on the signature page of such
Exhibit G);

(c) at any time by ALIC if any of the covenants set forth in Article
VI shall have been breached or any of the conditions set forth in Article VIII
hereof shall not have been satisfied, performed or complied with, in any
material respect, at or before the Closing Date and such breach,
non-satisfaction, non-performance or non-compliance has not been cured or
eliminated within 30 days after notice thereof has been given to AML; PROVIDED
that at the time of such termination ALIC has neither breached any of the
covenants set forth in Article V nor failed to satisfy, perform or comply with
any of the conditions set forth in Article VII hereof, in any material respect;

(d) by AML if the Disclosure Schedule is not delivered to AML within
twelve (12) days after the date of this Agreement, but AML's right to terminate
this Agreement pursuant to this Section 11.1(d) shall end upon its receipt of
the Disclosure Schedule;

(e) at any time by AML if any of the covenants set forth in Article V
shall have been breached or any of the conditions set forth in Article VII
hereof shall not have been satisfied, performed or complied with, in any
material respect, before the Closing Date and such breach, non-satisfaction,
non-performance or non-compliance has not been cured or eliminated within six
(6) days after notice thereof has been given to ALIC, PROVIDED that at the time
of such termination AML has neither breached any of the covenants set forth in
Article VI

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nor failed to satisfy, perform or comply with any of the conditions set forth in
Article VIII hereof, in any material respect;

(f) by AML if the Disclosure Schedule or AML's investigation pursuant
to Section 5.3 hereof discloses, with respect to AVLIC or AIC, any material
event, trend, condition, Contract, Liability, action, suit, proceeding, claim,
circumstance or fact of any character that is not acceptable to AML, in its sole
discretion, and AML gives notice thereof to ALIC within eighteen (18) days after
the date of this Agreement, and such non-acceptable event, trend, condition,
Contract, Liability, action, suit, proceeding, claim, circumstance or fact has
not been cured or eliminated within six (6) days after notice thereof has been
given to ALIC;

(g) by ALIC if ALIC's investigation pursuant to Section 6.3 hereof
discloses, with respect to AML's Distribution Force or the operation of its
Fixed Annuity business, any material event, trend, condition, Contract,
Liability, action, suit, proceeding, claim, circumstance or fact of any
character that is not acceptable to ALIC, in its sole discretion, and ALIC gives
notice thereof to AML within eighteen (18) days after the date of this
Agreement, and such non-acceptable event, trend, condition, Contract, Liability,
action, suit, proceeding, claim, circumstance or fact has not been cured or
eliminated within six (6) days after notice thereof has been given to AML; or

(h) at any time after July 31, 1996, by ALIC or AML, if the
transactions contemplated by this Agreement have not been consummated on or
before such date and such failure to consummate is not caused by a breach of
this Agreement (or any representation, warranty, covenant or agreement included
herein) by the party electing to terminate pursuant to this clause (h);
PROVIDED, HOWEVER, that either party may by notice to the other extend such date
to September 30, 1996 if the only conditions to Closing not satisfied as of July
31, 1996 are those set forth in Sections 7.4, 7.7, 8.4 or 8.7 hereof.

11.2 EFFECT OF TERMINATION. If this Agreement is validly terminated
pursuant to Section 11.1 hereof, this Agreement will forthwith become null and
void, and there will be no Liability on the part of ALIC or AML (or any of their
respective officers, directors, employees, agents, consultants or other
representatives), except that any such termination shall be without prejudice to
any claim which either party may have against the other for breach of this
Agreement (or any representation, warranty, covenant or agreement included
herein). All reasonable out-of-pocket expenses incurred in connection with this
Agreement and the transactions contemplated hereby by a non-breaching party who
terminates this Agreement upon a breach by the other under Section 11.1(b) or
(d) hereof will be reimbursed promptly by the breaching party.

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11.3 LIMITED EFFECT. The provisions of this Article XI shall be effective
only prior to Closing, and may not be invoked to terminate the Joint Venture,
which shall be governed solely by Articles II, XII and XIII of this Agreement.

ARTICLE XII

NOTICES

12.1 All notices and other communications required or permitted under this
Agreement must be in writing and will be deemed to have been duly given when
tendered if delivered by hand, or when received if sent by telecopy, or on the
next Business Day if sent by overnight delivery service, or three Business Days
after mailing by certified mail, return receipt requested, with first class
postage prepaid, to the parties at the following addresses:

If to ALIC, to: Ameritas Life Insurance Corp.
One Ameritas Way
P.O. Box 81889
Lincoln, NE 68501-1889
Fax: (402) 467-7939
Attn.: President

with a copy to: Ameritas Life Insurance Corp.
One Ameritas Way
P.O. Box 81889
Lincoln, NE 68501-1889
Fax: (402) 467-7956
Attn.: General Counsel

If to AML, to: American Mutual Life Insurance Company
611 Fifth Avenue
Des Moines, IA 50309
Fax: (515) 283-3402
Attn.: Chief Executive Officer

with a copy to: American Mutual Life Insurance Company
611 Fifth Avenue
Des Moines, IA 50309
Fax: (515) 283-3402
Attn.: General Counsel

Any party from time to time may change its address for the purpose of notices to
that party by giving a similar notice specifying a new address, but no such
notice will be deemed to have been given until it is actually received by the
party sought to be charged with the contents thereof.

12.2 To the extent any action must be taken by one party hereunder within a
limited period of time after a notice or other

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document is deemed to have been duly given by the other party pursuant to
Section 12.1 hereof, then the period within which such action must be taken
shall not commence until such notice or other document is actually received.

12.3 The parties agree that, with respect to any Contract, offer or other
document contemplated by this Agreement, the execution and transmittal of any
such document by facsimile as set forth herein shall be of the same binding
effect on the party so executing and transmitting the document as the delivery
of an original of such document bearing the handwritten execution of such party.
Each of the parties hereby agrees that it will promptly forward to the other an
executed original of any document transmitted by facsimile, but the failure to
do so or the absence of arrival thereof shall have no effect on the binding
nature of the document previously executed by facsimile.

ARTICLE XIII

MISCELLANEOUS

13.1 ENTIRE AGREEMENT. Except for documents executed by ALIC and AML
pursuant hereto, this Agreement supersedes all prior discussions and agreements
between the parties with respect to the subject matter of this Agreement, and
this Agreement (including the exhibits hereto, the Disclosure Schedule and other
Contracts and documents delivered in connection herewith) contains the sole and
entire agreement between the parties hereto with respect to the subject matter
hereof.

13.2 EXPENSES. Except as otherwise expressly provided in this Agreement
(including without limitation as provided in Article X and Section 11.2 hereof),
each of ALIC and AML will pay its own costs and expenses in connection with this
Agreement and the transactions contemplated hereby.

13.3 PUBLIC ANNOUNCEMENTS. At all times at or before the Closing, ALIC and
AML will each consult with the other before issuing or making any reports,
statements or releases to the public with respect to this Agreement or the
transactions contemplated hereby and will use good faith efforts to agree on the
text of a joint public report, statement or release or will use good faith
efforts to obtain the other party's approval of the text of any public report,
statement or release to be made solely on behalf of a party. If ALIC and AML
are unable to agree on or approve any such public report, statement or release
and such report, statement or release is, in the opinion of legal counsel to a
party, required by Law or may be appropriate in order to discharge such party's
disclosure obligations, then such party may make or issue the legally required
report, statement or release. Any such report, statement or release approved or
permitted to be made pursuant to this Section 13.3 may be

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disclosed or otherwise provided by ALIC or AML to any Person, including without
limitation to any employee or customer of either party hereto and to any
governmental or regulatory authority.

13.4 FURTHER ASSURANCES. ALIC and AML agree that, from time to time after
the Closing, upon the reasonable request of the other, they will cooperate and
will cause their respective Affiliates to cooperate with each other to effect
the orderly transition of the business, operations and affairs of AVLIC and AIC.

13.5 WAIVER. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof; such waiver must be
in writing and must be executed by the chief executive officer or chief
financial officer of such party. A waiver on one occasion will not be deemed to
be a waiver of the same or any other breach on a prior or future occasion. All
remedies, either under this Agreement, or by Law or otherwise afforded, will be
cumulative and not alternative.

13.6 AMENDMENT. This Agreement may be modified or amended only by a
writing duly executed by or on behalf of all parties hereto.

13.7 COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which will be deemed an original, but all of
which will constitute one and the same instrument.

13.8 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Agreement are intended solely for the benefit of the parties hereto, and their
respective successors or assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other Person. Notwithstanding
the foregoing, it is understood that Holding Company, AVLIC and AIC are the
direct beneficiaries of the indemnification rights set forth in Article X hereof
and the parties' obligations pursuant to Article II hereof. The parties
expressly agree that Holding Company, AVLIC and/or AIC may enforce those rights
directly by and for themselves. Without limiting the foregoing, it is also
expressly agreed that ALIC and/or AML shall have the right independently to
enforce those rights against the other party to this Agreement (through a
lawsuit or otherwise) on behalf of Holding Company, AVLIC and/or AIC.

13.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Nebraska (without regard to such
State's conflicts of law provisions).

13.10 BINDING EFFECT. This Agreement is binding upon and will inure to
the benefit of the parties and their respective successors and assignees.

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13.11 ASSIGNMENT LIMITED. Except as otherwise provided herein, this
Agreement or any right hereunder or part hereof may not be assigned by any party
to any Person who is not an Affiliate of such Person hereto without the prior
written consent of the other party hereto.

13.12 HEADINGS, GENDER, ETC. The headings used in this Agreement have been
inserted for convenience and do not constitute matter to be construed or
interpreted in connection with this Agreement. Unless the context of this
Agreement otherwise requires, (a) words of any gender are deemed to include each
other gender; (b) words using the singular or plural number also include the
plural or singular number, respectively; (c) the terms "hereof," "herein,"
"hereby," "hereto," and derivative or similar words refer to this entire
Agreement; (d) the terms "Article" or "Section" refer to the specified Article
or Section of this Agreement; (e) all references to "dollars" or "$" refer to
currency of the United States of America; and (f) parentheses are used in the
text hereof for ease of interpretation, and language set forth in parentheses
shall have the same force and effect as any other text. The parties hereto have
worked closely together in drafting, negotiating and reviewing this Agreement,
and therefore acknowledge and agree that any rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement.

13.13 INVALID PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of ALIC or AML under this Agreement will not be materially
and adversely affected thereby, (a) such provision will be fully severable; (b)
this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof; (c) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom; and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of ALIC and AML, effective as of the date first
written above.

AMERITAS LIFE INSURANCE CORP. AMERICAN MUTUAL LIFE
INSURANCE COMPANY

By: /s/ Lawrence J. Arth By: /s/ D T Doan
------------------------- -------------------------------

Its: Chairman and C.E.O. Its: Vice Chairman and President -
------------------------ -----------------------------
Insurance Operations

<PAGE>

FIRST AMENDMENT
to
JOINT VENTURE AGREEMENT DATED AS OF MARCH 8, 1996

THIS FIRST AMENDMENT (the "Amendment") is made and entered into as of April
1, 1996 by and between AMERITAS LIFE INSURANCE CORP. ("ALIC") and AMERICAN
MUTUAL LIFE INSURANCE COMPANY ("AML").

R E C I T A L S:

A. ALIC and AML are parties to a certain Joint Venture Agreement dated
as of March 8, 1996 (the "Agreement"). Except as context otherwise requires,
capitalized terms used herein shall have the meaning assigned to them in the
Agreement.

A. AML's obligation to close the transactions contemplated in the
Agreement is conditional upon obtaining the approval of the Nebraska Director
of Insurance of AML's Statement, which approval would permit AML "to enter
into the transactions contemplated in [the] Agreement and to exercise the
Option and to become the purchaser of all of the Shares of Holding Company at
any Auction or Unilateral Auction conducted in accordance with [the]
Agreement or any related Contract, all without further action of the Nebraska
Director of Insurance." (Agreement at Section 7.7.) Since the date of the
Agreement, the parties have been informed by the Director that such approval
is unnecessary.

A. Due to those changed circumstances, the parties have agreed that
certain provisions of the Agreement should be changed. The parties have also
agreed to include in this Amendment provisions which will correct certain
minor errors in the text of the Agreement.

A G R E E M E N T S:

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises set forth in this Amendment and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree that the Agreement shall be amended as follows:

1. SECTION 1.29. The words "Section 2.9(g)" in Section 1.29 are replaced
with the words "Section 2.9(i)."

2. SECTION 1.50. The words "Section 2.8(i)" in Section 1.50 are replaced
with the words "Section 2.8(j)."

3. SECTION 1.91. Clause (iii) of Section 1.91 of the Agreement is
deleted in its entirety.

<PAGE>

4. SECTION 2.2(c). The words "Section 2.8(i)" in the second sentence of
Section 2.2(c) are replaced with the words "Section 2.8(j)."

5. SECTION 2.5(c). The first sentence of Section 2.5(c) is deleted in
its entirety and replaced with the following:

To the extent any portion(s) of the Option become(s) exercisable in
accordance with the provisions of this Section 2.5, AML shall, in
order to exercise such portion(s) of the Option, give ALIC written
notice of AML's intention to exercise such portion(s) of the Option
within 30 days after the parties determine that such portion(s) of the
Option is (are) exercisable, and shall consummate the exercise of such
portion(s) of the Option within 60 additional days; provided, however,
that if the approval of the Director of Insurance of the State of
Nebraska is required to exercise such portion of the Option, then that
60 day period shall be extended for up to one year for AML to secure
such approval (as to any exercisable portion of the Option, the
"Exercise Period").

6. SECTION 2.6(b)(5). The second sentence of Section 2.6(b)(5) is
deleted in its entirety and replaced with the following:

Each offer hereunder shall be an unconditional offer
(subject only to any required approval of the Director of
Insurance for the State of Nebraska) to purchase all, but
not less than all, of the other party's Shares, for an
amount payable in cash at a closing in accordance with this
Section 2.6(b), and each offer must be at least one half of
one percent (0.5%) higher than the preceding offer, but in
all events such increase in the per-Share offer shall be an
amount which, when multiplied by the aggregate number of
Shares outstanding, equals at least $500,000.

7. SECTION 2.6(b)(6). The second sentence of Section 2.6(b)(6) is
deleted in its entirety and replaced with the following:

During the period prior to the closing of the purchase and
sale transaction, the seller shall cooperate fully with the
purchaser in all respects, including but not limited to full
cooperation and assistance in obtaining any necessary
approvals from the Director of Insurance for the State of
Nebraska and all actions necessary to facilitate such
closing and to continue the operation of the business, but
no action shall be taken by either party or any officer of
Holding Company or any Subsidiary thereof other than in the
ordinary course of business unless both ALIC and AML have
agreed to such action or unless the purchaser has provided
an irrevocable letter of credit or other

2
<PAGE>

similar evidence reasonably satisfactory to the seller of its ability
to close such purchase and sale transaction, in which case the
purchaser may (i) immediately designate an individual whom the parties
will immediately cause to be elected as the Chief Executive Officer of
Holding Company (and, at the purchaser's discretion, AVLIC and/or
AIC), and (ii) take such other actions as the purchaser may reasonably
determine.

8. SECTION 2.6(b). A new subparagraph (7) is added following Section
2.6(b)(6), as follows:

(7) Notwithstanding the foregoing, in the event that
it is necessary for the party described as the "purchaser"
in Section 2.6(b)(6) above to secure the approval of the
Director of Insurance for the State of Nebraska with respect
to such transaction and such approval has not been received,
then (i) such purchaser shall, within one year after the
Acceptance Date, place the purchase price, together with
interest accrued to such date as provided in Section
2.6(b)(6) hereof, in trust for the benefit of the selling
party, and the selling party shall thereafter be entitled to
receive the investment income earned thereon in lieu of the
interest provided in Section 2.6(b)(6) hereof; and (ii) such
purchaser may, at any time, assign to a Third Party, without
restriction, such purchaser's right to purchase the Shares
of ALIC.

9. SECTION 2.6(e)(2). The second sentence of Section 2.6(e)(2) is
deleted in its entirety and replaced with the following:

Such offer shall be unconditional (subject only to any
required approval of the Director of Insurance for the State
of Nebraska) and shall provide for the purchase price to be
paid in cash at a closing in accordance with this Section
2.6(e).

10. SECTION 2.6(e)(4). The second sentence of Section 2.6(e)(4) is
deleted in its entirety and replaced with the following:

During the period prior to the purchase and sale
transaction, the seller shall cooperate fully with the
purchaser in all respects, including but not limited to full
cooperation and assistance in obtaining any necessary
approvals from the Director of Insurance for the State of
Nebraska and all actions necessary to facilitate such
closing and to continue the operation of the business, but
no action shall be taken by either party or any officer of
Holding Company or any Subsidiary thereof other than in the
ordinary course of business, unless both ALIC and AML have
agreed to such action or unless

3
<PAGE>

the purchaser has provided an irrevocable letter of credit or other
similar evidence reasonably satisfactory to the seller of its ability
to close such purchase and sale transaction, in which case the
purchaser may (i) immediately designate an individual whom the parties
will immediately cause to be elected as the Chief Executive Officer of
Holding Company (and, at the purchaser's discretion, AVLIC and/or
AIC), and (ii) take such other actions as the purchaser may reasonably
determine.

11. SECTION 2.6(e). A new subparagraph (5) is added following Section
2.6(e)(4), as follows:

(5) Notwithstanding the foregoing, in the event that
it is necessary for the party described as the "purchaser"
in Section 2.6(e)(4) above to secure the approval of the
Director of Insurance for the State of Nebraska with respect
to such transaction and such approval has not been received,
then (i) such purchaser shall, within one year after the
Acceptance Date, place the purchase price, together with
interest accrued to such date as provided in Section
2.6(e)(4) hereof, in trust for the benefit of the selling
party, and the selling party shall thereafter be entitled to
receive the investment income earned thereon in lieu of the
interest provided in Section 2.6(e)(4) hereof; and (ii) such
purchaser may, at any time, assign to a Third Party, without
restriction, such purchaser's right to purchase the Shares
of ALIC.

12. SECTION 2.8(a)(1). The words ", if applicable" are inserted before
the semi-colon at the end of fourth line of Section 2.8(a)(1), so that the
clause ending with that semi-colon provides as follows:

13. SECTION 2.8(a)(2). A new subparagraph f) is added following Section
2.8(a)(2)e), as follows:

f) Notwithstanding the foregoing, in the event
that it is necessary for a party to this
Agreement which elects in the Notice of
Election to purchase the Selling Party's
Shares to secure the approval of the Director
of Insurance for the State of Nebraska with
respect to such transaction and such

4
<PAGE>

approval has not been received, then (i) such purchaser
shall, at any time prior to the expiration of the 120-
day period described in Section 2.8(c) hereof, place
the purchase price in trust for the benefit of the
selling party, and the Selling Party shall thereafter
be entitled to receive the investment income earned
thereon; (ii) such purchaser may, at any time, assign
to a Third Party, without restriction, such purchaser's
right to purchase the Shares of ALIC.

14. SECTION 3.9. The words "the ratio of aggregate indebtedness to net
capital was 6.9 to 1" in Section 3.9 are replaced with the following: "the ratio
of aggregate indebtedness to net capital was 0.69 to 1."

15. SECTION 11.2. The words "Section 11.1(b) or (d)" in the last sentence
of Section 11.2 are replaced with the words "Section 11.1(c) or (e)."

16. The form of Exhibit J attached hereto is substituted for the form of
Exhibit J which was originally attached to the Agreement.

17. Except as expressly amended herein, all terms and provisions of the
Agreement remain in full force and effect.

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their duly authorized officers as of the date set forth above.

AMERITAS LIFE INSURANCE CORP. AMERICAN MUTUAL LIFE INSURANCE COMPANY

By: /s/ Lawrence J. Arth By: /s/ Roger K. Brooks
---------------------------- ---------------------------------

Its: Chairman and CEO Its: Chief Executive Officer
---------------------------- ---------------------------------

<PAGE>

EXHIBIT J
to Joint Venture Agreement dated as of March 8, 1996 (the "Agreement")
- between Ameritas Life Insurance Corp. and
American Mutual Life Insurance Company

INITIAL OFFICERS

HOLDING COMPANY

Chairman, Chief Executive Officer
and President: Lawrence J. Arth
Executive Vice President: Kenneth C. Louis
Executive Vice President: D T Doan
Treasurer: Jon C. Headrick
Secretary and General Counsel: Norman M. Krivosha
Assistant Secretary and Assistant
General Counsel: Joseph K. Haggerty

AVLIC

Chairman and Chief Executive Officer: Lawrence J. Arth
President and Chief Operating Officer: [to be determined]
Executive Vice President: Kenneth C. Louis
Executive Vice President: D T Doan
Senior Vice President--Variable
Operations and Administration: Robert W. Bush
Senior Vice President--Variable Sales: Wayne E. Brewster
Vice President--Corporate Compliance
and Assistant Secretary: Kenneth R. Jones
Vice President and Actuary: James R. Haire
Vice President--Fixed Annuity
Investments: Ashok Chawla
Vice President--Fixed Annuity
Customer Service: Sandra K. Holmes
Vice President--Fixed Annuity
Product Development: Linda S. Streck
Comptroller: JoAnn M. Martin
Treasurer: Jon C. Headrick
Assistant Treasurer: Kevin Wagoner

J-1 of 2

<PAGE>

Assistant Vice President Individual
Client Services: Sharon K. Condello
Secretary and General Counsel: Norman M. Krivosha
Assistant General Counsel: Joseph K. Haggerty
Assistant Secretary: Sheila Sandy

AIC

Chairman: Lawrence J. Arth
President and Chief Executive Officer: William R. Giovanni
Senior Vice President: Kenneth C. Louis
Senior Vice President: D T Doan
Vice President--Corporate Compliance
and Assistant Secretary: Kenneth R. Jones
Treasurer: Jon C. Headrick
Secretary and General Counsel: Norman M. Krivosha
Vice President--Marketing and
Administration: Thomas C. Bittner
Vice President--Retail Sales: Janell D. Winsor
Vice President--Public Financing: Alan R. Eveland
Vice President--Order District
Manager: Dean E. Eden

J-2 of 2

<PAGE>

MANAGEMENT AND ADMINISTRATIVE SERVICE AGREEMENT

THIS MANAGEMENT AND ADMINISTRATIVE SERVICE AGREEMENT (the "Agreement") made
and entered into by and among Ameritas Variable Life Insurance Company, a
Nebraska life insurance corporation ("AVLIC"), American Mutual Life Insurance
Company ("AML"), an Iowa mutual life insurance company, and Ameritas Life
Insurance Corp., a Nebraska mutual life insurance company ("ALIC"), as of this
1st day of April, 1996.

W-I-T-N-E-S-S-E-T-H

WHEREAS, AVLIC is primarily engaged in the variable life insurance and
annuity business; and

WHEREAS, ALIC has, in the past, rendered administrative and other services,
advice and accommodations to AVLIC in the sales, administration, development and
marketing of variable life and annuity products for AVLIC; and

WHEREAS, AML is engaged in the life insurance and annuity business and has
the capacity to render management, administrative and other services, advice and
accommodations to AVLIC in the sales, administration, development and marketing
of fixed annuity products; and

WHEREAS, AVLIC was, immediately prior to the date hereof, a direct wholly-
owned subsidiary of ALIC and is currently owned by a joint venture of ALIC and
AML; and

WHEREAS, AVLIC has determined to contract with ALIC and AML to provide
management, administrative services, advice and accommodations to AVLIC on the
terms and conditions hereinafter set forth.

<PAGE>

NOW, THEREFORE, in consideration of the premises and the mutual promises of
the parties hereto, the parties hereby covenant and agree as follows:

1. DEFINITIONS. For the purposes of this Agreement, unless the context
otherwise requires, the following terms shall have the meanings set forth below:

(a) "ALIC Systems" means any System or part thereof, including
modifications thereof, which is at any time designed, developed, owned or
modified by ALIC or any of its Affiliates.

(b) "AML Systems" means any System or part thereof, including
modifications thereof, which is at any time designed, developed, owned or
modified by AML or any of its Affiliates

(c) "AVLIC's Business" means the continuous operation of a licensed
insurance company including the sale, issuance and ongoing administration of
such Fixed Annuity products and of Variable Products as are currently being
offered and as may be developed in the future.

(d) "Board" means the Board of Directors of AVLIC.

(e) "Cause" means gross negligence, willful or intentional misconduct,
and/or the material breach of any of the material duties set forth herein, which
breach has not been remedied so as to place AVLIC in the same position as if
same had never occurred within 15 Business Days after written notice is given by
AVLIC to AML with respect to the services, advice or accommodations provided for
the Fixed Annuity operations or by AVLIC to ALIC with respect to any other
services, advice or accommodations provided for hereunder of such gross
negligence, willful misconduct or breach.

(f) "DP Services" means data processing services.

2
<PAGE>

(g) "Fixed Annuity Assets" means those assets of AVLIC which are
identified as being related to and supporting the Fixed Annuity contracts of
AVLIC.

(h) "Fund Gain (Losses)" means gains (losses) in the separate accounts of
AVLIC resulting from incorrect mutual fund values, calculation of incorrect
separate account unit value, misapplication or misunderstanding of policyholder
instructions, out of balance mutual funds or policyholder accounts or similar
occurances.

(i) "Joint Venture Agreement" means that certain Joint Venture Agreement
dated as of March 8, 1996 between AML and ALIC.

(j) "Other Assets" means all of those invested assets of AVLIC which are
not Fixed Annuity Assets or which are not held in the separate accounts of
AVLIC, but which includes assets held in the general account.

(k) "System" or "Systems" means computer programs and programming aids
with supporting documentation, including, but not limited to, input and output
formats, program listings, systems flow charts, narrative descriptions and
operating instructions, and shall include tangible media upon which such
programs are recorded.

(l) "Third Party Systems" means Systems other than ALIC Systems and AML
Systems.

Unless otherwise specified herein, the capitalized terms used herein shall
have the same meaning as used in the Joint Venture Agreement.

2. DATA PROCESSING

2.1 ALIC DP Services. Except as otherwise specifically provided in
Sections 2.3 and 3.3, ALIC agrees to provide or to cause to be provided to AVLIC
all DP Services as are

3
<PAGE>

reasonably necessary in order to provide the services contemplated for the
proper operation of AVLIC's Business. Such DP Services shall at all times be
of at least equivalent scope, timeliness, and quality to those provided by
ALIC to AVLIC as of the date of this Agreement.

2.2 RIGHT TO USE SYSTEMS OF ALIC. Except as otherwise specifically
provided in Sections 2.3 and 3.3, ALIC has obtained all third-party consents, if
any, necessary to permit all Systems to be utilized by ALIC in providing any and
all services contemplated under this Agreement. Upon termination of this
Agreement, ALIC shall deliver to AVLIC magnetic tapes, or the then equivalent
media, containing:

a) the data records for the business being administered for AVLIC
along with hard copy record layouts or printouts, and

b) subject only to any existing restrictions thereon previously
imposed by a third party, all specific plan files and operating
company tables; and

ALIC shall grant AVLIC for use by AVLIC or as AVLIC may determine, subject only
to any existing restrictions thereon previously imposed by a third party, a
nonexclusive, royalty-free license to use the following:

a) any ALIC System developed or purchased during the term of this
Agreement in order to provide DP Services principally to AVLIC,
so long as AVLIC agrees to pay to ALIC the undepreciated cost of
such System over a five year period if it chooses to utilize such
ALIC System;

b) any improvements or modifications, including source code, which
ALIC or any of its Affiliates have made to Third Party Systems
prior to or during the term of this Agreement which are used in
providing services to AVLIC

4
<PAGE>

hereunder and which ALIC has authority to assign royalty-free
and without loss of the right to use by ALIC or its Affiliates or
without any additional royalty fees being required to be paid;
and

c) any ALIC System that is essential to the administration of
AVLIC's Variable Products and cannot be obtained elsewhere
without commercially unreasonable expense;

provided, however, that in order to preserve and to protect the confidentiality
of any ALIC Systems, if AVLIC shall elect to use such ALIC Systems after the
date this Agreement is terminated, AVLIC shall enter into an agreement or
agreements with ALIC or ALIC's Affiliates containing such covenants and
conditions as are necessary or reasonably required to protect the
confidentiality of such ALIC System.

2.3 AML DP SERVICES. AML agrees to provide or cause to be provided to
AVLIC all DP Services as are reasonably necessary in order to provide the
services contemplated for the proper operation of AVLIC's Fixed Annuity
business. Such DP Services shall at all times be of at least equivalent scope,
timeliness and quality to those provided by AML with respect to its own Fixed
Annuity business as of the date of this Agreement.

2.4 RIGHT TO USE SYSTEMS OF AML. AML has obtained all third-party
consents, if any, necessary to permit all Systems to be utilized by or at the
direction of AML in providing any and all services contemplated under this
Agreement. Upon termination of this Agreement, AML shall deliver to AVLIC
magnetic tapes, or the then equivalent media, containing:

a) the data records for the business being administered for AVLIC
along with hard copy record layouts or printouts, and

5
<PAGE>

b) subject only to any existing restrictions thereon previously
imposed by a third party, all specific plan files and operating
company tables; and

AML shall grant AVLIC for use by AVLIC or as AVLIC may determine, subject only
to any existing restrictions thereon previously imposed by a third party, a
nonexclusive, royalty-free license to use the following:

a) any AML System developed or purchased during the term of this
Agreement in order to provide DP Services principally to AVLIC,
so long as AVLIC agrees to pay to AML the undepreciated cost of
such System over a five year period if it chooses to utilize such
AML System;

b) any improvements or modifications, including source code, which
AML or any of its Affiliates have made to Third Party Systems
prior to or during the term of this Agreement which are used in
providing services to AVLIC hereunder and which AML has authority
to assign royalty-free and without loss of the right to use by
AML or its Affiliates or without any additional royalty fees
being required to be paid; and

c) any AML System that is essential to the administration of AVLIC's
Variable Products and cannot be obtained elsewhere without
commercially unreasonable expense;

provided, however, that in order to preserve and to protect the confidentiality
of any AML Systems, if AVLIC shall elect to use such AML Systems after the date
this Agreement is terminated, AVLIC shall enter into an agreement or agreements
with AML or AML's Affiliates

6
<PAGE>

containing such covenants and conditions as are necessary or reasonably
required to protect the confidentiality of such AML System.

2.5 ALIC COMPUTER EQUIPMENT. Except for computer equipment in the
possession or offices of AVLIC's insurance agents, ALIC will provide or will
cause to be provided all computer equipment which, together with the computer
equipment presently owned by AVLIC, is necessary or reasonably required to
render the DP Services to be rendered to AVLIC pursuant to this Section 2. Such
computer equipment shall be provided at no cost to AVLIC except as a portion of
the costs provided for in Section 7.

2.6 AML COMPUTER EQUIPMENT. Except for computer equipment in the
possession or offices of AVLIC's insurance agents, AML will provide or will
cause to be provided all computer equipment which, together with the computer
equipment presently owned by AVLIC, is necessary or reasonably required to
render the DP Services to be rendered to AVLIC pursuant to this Section 2. Such
computer equipment shall be provided at no cost to AVLIC except as a portion of
the costs provided for in Section 7.

2.7 SAFEGUARDING DATA. ALIC and AML shall establish or will cause
reasonable safeguards to be established to protect against the distribution,
loss or alteration of AVLIC's data files and other records. Such safeguards
shall be no less rigorous than those ALIC or AML uses in protecting its own data
and as is necessary to comply with applicable laws and regulations.

3. MANAGEMENT, ADMINISTRATIVE AND OTHER SERVICES, ACCOMMODATIONS AND
COSTS

3.1 COMPENSATION OF EMPLOYEES. No employee of ALIC or AML shall receive
any salary or other compensation, including without limitation, director's fees,
from AVLIC by

7
<PAGE>

reason of performing duties on behalf of AML or ALIC for AVLIC under the
terms of this Agreement except as may be determined by the Board of Directors
of AVLIC in its sole and absolute discretion.

3.2 ALIC SERVICES. Except as provided in Sections 2.3 and 3.3, ALIC shall
provide to AVLIC all management, administrative and other services, advice and
other accommodations reasonably necessary to effectively and efficiently manage,
operate and administer AVLIC's Business in a manner consistent with good
business practice and the terms of the Joint Venture Agreement. The foregoing
shall include all materials, supplies and other sundry items reasonably
necessary to providing the foregoing. The foregoing management, administrative
and other services, advice and accommodations shall include without limitation
all such management, administrative, and other services, advice and
accommodations currently being provided by ALIC to AVLIC.

3.3 AML SERVICES. AML shall provide to AVLIC all management,
administrative and other services, advice and other accommodations reasonably
necessary to effectively manage, operate and administer the Fixed Annuity
operations of AVLIC in a manner consistent with good business practice and the
terms of the Joint Venture Agreement. The foregoing shall include all
materials, supplies and other sundry items reasonably necessary to providing the
foregoing. The foregoing management, administrative and other services, advice
and accommodations shall include without limitation the following:

(a) All such management, administrative, and other services, advice and
accommodations currently being provided by AML with respect to its own fixed
annuities;

8
<PAGE>

provided, however, that ALIC will incorporate the Fixed Annuity
operational information into the complete financial or other reports of AVLIC
and will be the preparer of all such reports; and

(b) AML shall provide in a timely fashion such information with respect to
AVLIC's Fixed Annuity business in such form as is reasonably necessary for ALIC
to prepare all of AVLIC's financial statements and other reports as are required
by applicable law or regulation or by customary insurance operations and
practices.

3.4 COSTS. ALIC and AML shall pay all of their own respective personnel
and other costs and expenses of all types necessary or appropriate to render the
management, administrative and other services, advice and accommodations
provided for by this Agreement, except as to the following costs which shall
either be paid directly by AVLIC, or if paid by ALIC or AML on behalf of AVLIC,
shall be promptly reimbursed by AVLIC:

(a) All costs and expenses incurred in connection with the employment of
outside legal counsel for (i) policyholder or customer litigation involving
AVLIC and (ii) enforcing defaulted obligations related to invested assets;

(b) All out of pocket costs and expenses incurred in connection with the
independent audit of the financial statements and governmental regulatory
examinations of AVLIC by persons who are not employees of ALIC or AML;

(c) Any costs incurred in the development of substantially new or
different products requested by AVLIC in excess of two such variable products to
be developed by ALIC in each calendar year and two such fixed annuity products
by AML in each calendar year;

(d) Out of pocket costs incurred in connection with meeting with
nationally recognized insurance company rating agencies;

9
<PAGE>

(e) All costs and expenses incurred in connection with extraordinary
actuarial, tax, accounting, systems, or other studies, functions or
consultations performed solely for and at the request of AVLIC by independent
professional or consulting individuals or organizations;

(f) Investment expenses detailed in Column 4 on Lines 9.1 and 9.2 of
Exhibit 5 General Expenses of the 1995 Annual Statement Blank of the National
Association of Insurance Commissioners for life, health and accident insurance
(the "Exhibit 5 Blank");

(g) All fines and penalties of AVLIC including interest assessed;

(h) Premium taxes;

(i) Federal taxes, state or other governmental subdivision taxes, licenses
and fees and interest thereon;

(j) Costs (including wages and benefits) incurred in connection with the
employment or leasing of a Chief Operating Officer of AVLIC;

(k) Guaranty Fund assessments;

(l) Fees and other costs related to the acquisition, disposition or
maintenance of Fixed Annuity Assets or Other Assets including commissions,
custodian fees, collection fees and bank service fees;

(m) Expenses for the expansion of the broker-dealer distribution system to
the extent not covered by allowances available to AIC;

(n) Agency expense allowances in Column 1 on Line 7.1 of the Exhibit 5
Blank;

(o) Fees paid to Outside Directors;

(p) Costs of insurance not otherwise covered by this Agreement which is
purchased directly by AVLIC and at AVLIC's discretion; and

10
<PAGE>

(q) Fund Gains (Losses); provided, however, that payment by AVLIC of
amounts under this Section 3.4(q) shall not relieve any other party of its
obligation to provide indemnification for such amounts pursuant to Section 8.6
hereof.

3.5 MANAGEMENT ADMINISTRATIVE SERVICES.

(a) ALIC agrees that the management, administrative and other services,
advice and accommodations performed hereunder by ALIC will at all times be
timely and accurate and of at least equivalent quality to those provided by ALIC
to AVLIC as of the date of this Agreement.

(b) ALIC shall retain the right to contract with any third party,
affiliated or unaffiliated, for the performance of services or use of facilities
upon receipt of the consent of the Executive Committee of AVLIC, which shall not
be unreasonably withheld.

(c) AML agrees that the management, administrative and other services,
advice and accommodations performed hereunder by AML will at all times be
timely and accurate and of at least equivalent quality to those provided by AML
for the administration of its own Fixed Annuities as of the date of this
Agreement.

(d) AML shall retain the right to contract with any third party,
affiliated or unaffiliated, for the performance of services or use of facilities
upon receipt of the consent of the Executive Committee of AVLIC, which shall not
be unreasonably withheld.

(e) No facility or System used by ALIC or AML in performing services for
or subject to use by AVLIC shall be deemed to be transferred, assigned,
conveyed, or leased to AVLIC by performance or use pursuant to this Agreement,
except as ALIC or AML and AVLIC may otherwise agree in writing.

11
<PAGE>

(f) In providing any services hereunder which require the exercise of
judgment, ALIC will endeavor to perform any such service in accordance with any
reasonable and appropriate standards and guidelines AVLIC develops and
communicates to ALIC provided such guidelines are in accord with all relevant
Laws.

(g) In providing any services hereunder which require the exercise of
judgment, AML will endeavor to perform any such service in accordance with any
reasonable and appropriate standards and guidelines AVLIC develops and
communicates to AML provided such guidelines are in accord with all relevant
Laws.

(h) The performance or receipt of services or the making available or use
of facilities pursuant to this Agreement shall in no way impair the absolute
control of the business and operations of each of the parties by its own Board
of Directors.

(i) AVLIC shall be entitled to all income realized on its business
activity and on its investments and shall be responsible for all investment
expenses incurred in its behalf except as specifically provided by this
Agreement.

3.6 COOPERATION. ALIC and AML agree to cooperate so long as this
Agreement is fully in effect to assist in facilitating the proper operations of
AVLIC, including the timely sharing of information, the coordination of
operating procedures and supplying of individual employees by ALIC or AML,
respectively, to serve as officers of AVLIC; provided, however, that AML, ALIC
and AVLIC agree to cause any such individual provided to act as an officer of
AVLIC to be removed upon the request of the party supplying such individual in
accordance with the Joint Venture Agreement.

12
<PAGE>

3.7. ADDITIONAL DUTIES. ALIC and AML agree that they will perform
additional duties of providing such sales management, compliance supervision,
recruiting, market conduct supervision, market suggestions and advice,
logistical support, materials distribution, advanced underwriting, meeting
sponsorship and continuing education and other marketing-related activities as
may be reasonably required from time to time for the sale and servicing of AVLIC
products by the Distribution Force of ALIC and the Distribution Force of AML,
respectively. The duties provided for in this Section 3.7 shall be in addition
to the other obligations provided for in this Agreement.

4. SUPERVISION BY BOARD OF DIRECTORS. ALIC and AML acknowledge that the
Board is vested with the power, authority, and responsibility for managing
AVLIC's Business, and acknowledges that any and all actions, whether management,
supervisory or ministerial, taken by ALIC or AML pursuant to Sections 2 and 3
shall be subject to the continuous supervision of said Board; provided, however,
that the routine, day to day practices and procedures used to comply with the
terms of this Agreement by AML and ALIC shall be within their respective
discretion so long as they are consistent with the terms and conditions of this
Agreement and with good business practices.

5. INVESTMENTS MANAGED BY AML. AML agrees to act as investment advisor
for and manage the investment and reinvestment of the Fixed Annuity Assets
subject to the supervision of the Board and any committees thereof designated to
perform such supervisory functions as appropriate and consistent with the
limitations set forth in Section 5.2 hereof. For purposes of this Agreement,
AML shall be granted and may exercise full investment discretion and authority

13
<PAGE>

to act as agent for AVLIC in acquiring, disposing of or otherwise managing the
Fixed Annuity Assets subject to the supervision of the Board or such designated
committee.

5.1 INVESTMENT ADVISORY SERVICES. In carrying out its obligations to
manage the investment and reinvestment of the Fixed Annuity Assets of AVLIC, AML
shall:

(i) perform research and obtain and evaluate pertinent economic,
statistical and financial data relevant to the investment policies of AVLIC;

(ii) consult with the Board or the designated committee thereof and
furnish to the Board recommendations with respect to an overall investment
strategy for the Fixed Annuity Assets of AVLIC for approval, modification, or
rejection by the Board or such designated committee thereof;

(iii) seek out and implement specific investment opportunities
consistent with any overall investment strategies approved by the Board or such
designated committee thereof;

(iv) take such steps as are necessary to implement any overall
investment strategies approved by the Board or such designated committee thereof
including, with respect to its management of investments and any other property
of AVLIC, providing or obtaining such services as may be necessary in managing,
acquiring or disposing of investments;

(v) regularly report to the Board or the designated committee thereof
with respect to the implementation of any approved overall investment strategy
and any other significant activities in connection with management of the Fixed
Annuity Assets of AVLIC including furnishing, upon AVLIC's request, within 30
days after the end of each calendar quarter, a statement of all purchases and
sales during the quarter and a schedule of Fixed Annuity Assets as of the end of
the quarter; and

14
<PAGE>

(vi) maintain all required accounts, records, memoranda, instructions
or authorizations relating to the acquisition or disposition of investments for
AVLIC.

5.2 LIMITATIONS ON INVESTMENT SERVICES. AML shall perform the investment
services under this Agreement subject to the supervision and review of the Board
or such designated committee thereof and in a manner consistent with the
investment objectives and policies of AVLIC and the provisions of other
applicable Laws.

5.3 PORTFOLIO TRANSACTIONS AND BROKERAGE. AML will determine the Fixed
Annuity Assets to be purchased or sold by AVLIC, subject to the provisions of
Subsections 5.1 and 5.2, and may place orders pursuant to its determinations
either directly with the issuer, with any broker-dealer or underwriter that
specializes in the investments for which the order is made or with any other
broker-dealer selected by AML. AML is authorized to select the broker-dealers
that will execute the purchases and sales of investments for AVLIC and will use
its best efforts to obtain the most favorable net results and execution of
AVLIC's orders, taking into account all appropriate factors, including price,
dealer spread or commission, if any, size of the transaction and difficulty of
the transaction. Subject to the above requirements and applicable regulatory
restrictions, nothing shall prohibit AML from selecting broker-dealers with
which it or AVLIC is affiliated.

5.4 ACTIVITIES OF AML

(i) The investment services of AML to AVLIC under
this Agreement are not to be deemed exclusive and AML will be free to render
similar services to others so long as its services under this Agreement are not
impaired. It is understood that directors, officers and employees of AML are or
may become interested in AVLIC as directors, officers or otherwise.

15
<PAGE>

(ii) It is agreed that AML may use any supplemental investment research
obtained for the benefit of AVLIC in providing investment advice to its other
investment advisory accounts, if any, and may utilize other sources, at AML's
cost, to provide some of the services provided hereunder. AML and its
Affiliates may also use such information in managing their own accounts.
Conversely, such supplemental information obtained by the placement of business
for AML or other entities advised by AML will be considered by and may be useful
to AML in carrying out its obligations to AVLIC.

(iii) Investments held by AVLIC may also be held by separate investment
accounts or other mutual funds for which AML may act as an advisor or by AML or
its Affiliates. Because of different investment objectives or other factors, a
particular investment may be bought by AML or its Affiliates or for itself or
for one or more clients when either it or one of its Affiliates or one or more
clients are selling the same security. If purchases or sales of investments for
AVLIC are made by AML, for itself or its Affiliates or for other entities for
which AML or its Affiliates act as investment advisor or for their advisory
clients, or if such purchases or sales arise for consideration at or about the
same time, AVLIC agrees that AML may make transactions in such investments,
insofar as feasible, for the respective entities and clients in a manner AML
deems equitable to all. To the extent that transactions on behalf of more than
one client of AML during the same period may increase the demand for investments
being purchased or the supply of investments being sold, AVLIC recognizes that
there may be an adverse effect on price.

(iv) It is agreed that, on occasions when AML deems the purchase or sale of
an investment to be in the best interest of AVLIC as well as other accounts or
companies (including

16
<PAGE>

its own or its Affiliates'), it may, to the extent permitted by applicable
laws and regulations, but will not be obligated to, aggregate the investments
to be so sold or purchased for AVLIC with those to be sold or purchased for
other accounts or companies in order to obtain favorable execution and lower
brokerage commissions. In that event, allocation of the investments
purchased or sold, as well as the expenses incurred in the transaction, will
be made by AML in the manner it considers to be most equitable and consistent
with its fiduciary obligations to AVLIC and to such other accounts or
companies. AVLIC recognizes that in some cases this procedure may adversely
affect the size of the position obtainable for AVLIC.

6. INVESTMENTS MANAGED BY ALIC. ALIC agrees to act as investment advisor
for and manage the investment and reinvestment of the Other Assets subject to
the supervision of the Board and any committees thereof designated to perform
such supervisory functions as appropriate and consistent with the limitations
set forth in Section 6.2 hereof. For purposes of this Agreement, ALIC shall be
granted and may exercise full investment discretion and authority to act as
agent for AVLIC in acquiring, disposing of or otherwise managing the Other
Assets subject to the supervision of the Board or such designated committee.

6.1 INVESTMENT ADVISORY SERVICES. In carrying out its obligations to
manage the investment and reinvestment of the Other Assets of AVLIC, ALIC shall:

(i) perform research and obtain and evaluate pertinent economic,
statistical and financial data relevant to the investment policies of AVLIC;

(ii) consult with the Board or the designated committee thereof and
furnish to the Board recommendations with respect to an overall investment
strategy for the Other Assets of

17
<PAGE>

AVLIC for approval, modification, or rejection by the Board or such
designated committee thereof;

(iii) seek out and implement specific investment opportunities
consistent with any overall investment strategies approved by the Board or such
designated committee thereof;

(v) regularly report to the Board or the designated committee thereof
with respect to the implementation of any approved overall investment strategy
and any other significant activities in connection with management of the Other
Assets of AVLIC including furnishing, upon AVLIC's request, within 30 days after
the end of each calendar quarter, a statement of all purchases and sales during
the quarter and a schedule of Other Assets as of the end of the quarter; and

(vi) maintain all required accounts, records, memoranda, instructions
or authorization relating to the acquisition or disposition of investments for
AVLIC.

6.2 LIMITATIONS ON ADVISORY SERVICES. ALIC shall perform the investment
services under this Agreement subject to the supervision and review of the Board
or such designated committee thereof and in a manner consistent with the
investment objectives and policies of AVLIC and the provisions of applicable
Laws.

6.3 PORTFOLIO TRANSACTIONS AND BROKERAGE. ALIC will determine the Other
Assets to be purchased or sold by AVLIC, subject to the provisions of
Subsections 6.1 and 6.2, and may

18
<PAGE>

place orders pursuant to its determinations either directly with the issuer,
with any broker-dealer or underwriter that specializes in the investments for
which the order is made or with any other broker-dealer selected by ALIC.
ALIC is authorized to select the brokers-dealers that will execute the
purchases and sales of investments for AVLIC and will use its best efforts to
obtain the most favorable net results and execution of AVLIC's orders, taking
into account all appropriate factors, including price, dealer spread or
commission, if any, size of the transaction and difficulty of the
transaction. Subject to the above requirements and applicable regulatory
restrictions, nothing shall prohibit ALIC from selecting broker-dealers with
which it or AVLIC is affiliated.

6.4 ACTIVITIES OF ALIC.

(i) The investment services of ALIC to AVLIC under this Agreement are not
to be deemed exclusive and ALIC will be free to render similar services to
others so long as its services under this Agreement are not impaired. It is
understood that directors, officers and employees of ALIC are or may become
interested in AVLIC as directors, officers, or otherwise, and that directors,
officers, or employees of AVLIC are or may become similarly interested in ALIC.

(ii) It is agreed that ALIC may use any supplemental investment research
obtained for the benefit of AVLIC in providing investment advice to its other
investment advisory accounts, if any, and may utilize other sources, at AVLIC's
cost, to provide some of the services provided hereunder. ALIC and its
Affiliates may also use such information in managing their own accounts.
Conversely, such supplemental information obtained by the placement of business
for

19
<PAGE>

ALIC or other entities advised by ALIC will be considered by and may be
useful to ALIC in carrying out its obligations to AVLIC.

(iii) Investments held by AVLIC may also be held by separate investment
accounts or other mutual funds for which ALIC may act as an advisor or by ALIC
or its Affiliates. Because of different investment objectives or other factors,
a particular investment may be bought by ALIC or its Affiliates or for itself or
for one or more clients when either it or one of its Affiliates or one or more
clients are selling the same security. If purchases or sales of investments for
AVLIC are made by ALIC, for itself or its Affiliates or for other entities for
which ALIC or its Affiliates act as investment advisor or for their advisory
clients, or if such purchases or sales arise for consideration at or about the
same time, AVLIC agrees that ALIC may make transactions in such investments,
insofar as feasible, for the respective entities and clients in a manner ALIC
deems equitable to all. To the extent that transactions on behalf of more than
one client of ALIC during the same period may increase the demand for
investments being purchased or the supply of investments being sold, AVLIC
recognizes that there may be an adverse effect on price.

(iv) It is agreed that, on occasions when ALIC deems the purchase or
sale of an investment to be in the best interest of AVLIC as well as other
accounts or companies (including its own or its Affiliates'), it may, to the
extent permitted by applicable laws and regulations, but will not be obligated
to, aggregate the investments to be so sold or purchased for AVLIC with those to
be sold or purchased for other accounts or companies in order to obtain
favorable execution and lower brokerage commissions. In that event, allocation
of the investments purchased or sold, as well as the expenses incurred in the
transaction, will be made by ALIC in

<PAGE>

the manner it considers to be most equitable and consistent with its
fiduciary obligations to AVLIC and to such other accounts or companies.
AVLIC recognizes that in some cases this procedure may adversely affect the
size of the position obtainable for AVLIC.

7. AMOUNT AND PAYMENT OF FEES

7.1 ALIC FEES. As consideration for ALIC providing services pursuant
to this Agreement for AVLIC, AVLIC will pay ALIC pursuant to Exhibit 1 hereto.

7.2 AML FEES. As consideration for AML providing services pursuant to
this Agreement for AVLIC, AVLIC will pay AML pursuant to Exhibit 2 hereto.

7.3 COMPENSATION FOR ADDITIONAL DUTIES. Each of the parties
acknowledges and agrees that it is difficult to determine how much effort
will be required of ALIC and AML during the term of this Agreement to perform
the duties described in Section 3.7 above. Therefore it is appropriate that
the Board of Directors of AVLIC shall determine each quarter during the term
of this Agreement the amount of effort extended by ALIC and AML during the
immediately preceding quarter in connection with the services described in
Section 3.7 above, including but not limited to the volume of business
realized by AVLIC, and establish a sum to be paid to ALIC and AML during the
next immediately succeeding quarter. The parties further recognize and agree
that the effort to be extended by ALIC and AML may not be equal and therefore
the amounts determined to be paid to ALIC and AML need not be equal but shall
be in that sum as the Board of Directors of AVLIC in its sole and absolute
discretion shall determine to be fair and equitable under the circumstances.
In the event that the Board of Directors is at any time unable to reach a
decision as to the amount of compensation to be paid, then the amount
determined by

<PAGE>

the Board in its most recent determination hereunder shall remain payable for
subsequent periods until and unless the Board subsequently reaches a decision.

7.4 MECHANICS OF TIMING, CALCULATION, AND REPORTING OF PAYMENT OF FEES.
ALIC and AML shall each deliver to AVLIC, within 10 days after the end of
each calendar month during the term of this Agreement, statements showing all
fees due and payable pursuant to this Agreement in respect of such period,
together with any amounts to be reimbursed pursuant to Section 3.4 hereof.
Such statements shall include detail sufficient to show the basis of ALIC's
and AML's calculation of such fees. AVLIC shall pay all amounts due
thereunder within 10 days after such statement is received.

8. CONFIDENTIALITY, PERFORMANCE AND RELATIONSHIP OF PARTIES

8.1 DISCLOSURE OF INFORMATION. Section 2.8(h) of the Joint Venture
Agreement is hereby incorporated herein in its entirety by reference thereto
as if it were fully set forth herein.

8.2 RECORDS AND REPORTS. All forms, records, statements, reports,
files and other data and information prepared, maintained or collected by
ALIC and AML on behalf of AVLIC in the performance of this Agreement shall
become the sole property of AVLIC and shall be delivered to AVLIC upon
request in the form and format in which it is maintained; provided, however,
that if such request impedes ALIC's or AML's ability to perform its duties or
obligations under this Agreement, then to the extent of such impediment such
party shall be relieved of such duty and obligation without reduction in fees
to be paid by AVLIC. AML and ALIC agree to preserve, for the period
prescribed by applicable regulatory authorities, the Books and Records of
AVLIC maintained by AML and ALIC pursuant to this Agreement.

<PAGE>

8.3 INSPECTION OF BOOKS AND RECORDS. ALIC and AML shall keep proper
Books and Records relating to the services performed hereunder in which full
and correct entries and financial data will be maintained in accordance with
generally accepted accounting practices. AVLIC may at its option and at its
expense inspect the Books and Records of ALIC and/or AML as they pertain to
this Agreement at the offices of ALIC and AML in which said Books and Records
are maintained, during normal business hours, for any purpose related to
ALIC's or AML's performance of this Agreement or the collection and
determination of the fees required to be paid by AVLIC to ALIC and AML under
this Agreement. Such inspection and/or audits may be on a continuous or
periodic basis or both and may be conducted by employees of AVLIC or an
Affiliate thereof or an independent auditor retained by such person. Either
ALIC or AML may also request that AVLIC make such an inspection. The
Executive Committee of AVLIC will then determine if it desires to make such
an inspection. If the Executive Committee does not decide to perform such an
inspection, then the party making such request may conduct such inspection at
its own expense; provided, however, that if material inaccuracies are found
in the course of the inspection, then AVLIC will pay the costs of such
inspection. Unless otherwise agreed, AML and ALIC shall continue to provide
such financial and statistical reports to AVLIC as they are currently
preparing for fixed annuities and variable products.

8.4 PERFORMANCE. The failure of any party to insist upon strict
performance of any provision of this Agreement shall not constitute a waiver
of the right to insist upon strict performance or the obligation to strictly
perform thereafter.

<PAGE>

8.5 RELATIONSHIP OF PARTIES.

(a) ALIC and AML assume no responsibility under this Agreement other
than to render the services, advice and assistance provided for hereunder in
good faith and with reasonable care. The relationship between AVLIC as the
recipient of services and ALIC and AML as the providers of services with
respect to and for the purposes of this Agreement shall be that of
independent contractor and nothing contained herein shall create the
relationship of employer-employee or principal-agent, except that those
individuals who are elected as officers or directors of AVLIC shall have the
normal duties, responsibilities and relationships attendant to those
positions.

(b) Except as provided herein and except for individuals when acting in
their capacity as officers or directors of AVLIC, neither ALIC, AVLIC nor AML
shall act or hold itself out as the agent of the other. Associates of ALIC
and AML providing administrative services to AVLIC pursuant to this Agreement
shall provide such services as associates of ALIC and AML except when acting
as directors and officers of AVLIC. The facilities used by ALIC and AML in
providing such services shall be deemed to be owned and operated by ALIC and
AML, respectively, and, unless otherwise provided in writing, shall not be
considered as being leased to AVLIC.

8.6 INDEMNIFICATION.

(a) ALIC and AML each agree to indemnify and to hold AVLIC harmless
from any and all Damages incurred by it or any of its Affiliates as the
result of (i) any negligent or intentional act or omission or violation by
ALIC or AML (or their respective employees or agents) of its obligations
hereunder, except to the extent such negligent or intentional act,

<PAGE>

omission or violation is caused by AVLIC or agents of AVLIC who are not
employees or agents of AML or ALIC; or (ii) any claims of infringement of any
license, patent, trademark or other right of another person asserted against
AVLIC with respect to any System used in providing services hereunder.
Notwithstanding the foregoing, the provisions of this section will not apply
with respect to (i) consequential damages or (ii) actions or omissions by
agents or employees of ALIC or AML when such acts or omissions occur in those
individuals' fiduciary capacity as officers or directors of AVLIC and not as
providers of services hereunder; and, where the action required to be
performed under this Agreement involves the exercise of discretion, the fact
that damages result to AVLIC by reason of an ALIC or AML agent having
exercised such discretion shall not, if such action was taken in good faith
and with reasonable care, be deemed to be an act of negligence for which
indemnity may be recovered by AVLIC. In instances in which the agents or
employees of ALIC or AML are acting in their fiduciary capacities as officers
or directors of AVLIC, ALIC and AML shall be liable only for actions or
omissions involving intentional misconduct or a knowing violation of Law, or
those not made in good faith.

(b) AVLIC agrees to indemnify and to hold ALIC, AML and their
respective Affiliates harmless from any and all Damages incurred by ALIC or
AML and/or any of their respective Affiliates as the result of or in
connection with claims by Third Parties in connection with the performance of
duties under this Agreement except to the extent of claims described in
Section 8.6(a) (and excluding the costs incurred by ALIC or AML in rendering
the services and providing related accommodations and other goods under the
terms of this Agreement).

<PAGE>

(c) Nothing set forth in this Section 8.6 shall deprive AML, ALIC or
AVLIC of any claims or causes of action that any of them may have against the
other(s) which are independent of this Agreement.

(d) AVLIC agrees that the directors and officers of AVLIC who are
provided by AML and ALIC as contemplated under this Agreement shall not be
liable for Damages which result from acts or omissions by such officers or
directors

(i) which are done or omitted to be done in connection with
their positions as director or officer of AVLIC; and

(ii) which are done in good faith; and

(iii) which do not involve intentional misconduct or a knowing
violation of the law; and

(iv) which do not result in such officer or director receiving an
improper direct or indirect financial benefit.

(e) Additionally, AVLIC agrees to indemnify and hold harmless all
directors and officers provided by AML and ALIC against any Damages they
incur as a result of or in connection with any action or failure to act by
such officer or director which result from acts or omissions by such officers
or directors

(i) which are done or omitted to be done in connection with
their positions as director or officer of AVLIC; and

(ii) which are done in good faith; and

(iii) which do not involve intentional misconduct or a knowing
violation of the law; and

<PAGE>

(iv) which do not result in such officer or director receiving an
improper direct or indirect financial benefit.

(f) Within a reasonable time after the party seeking indemnification
pursuant to this Section 8.6 (the "Indemnified Party") has actual knowledge
of a claim for Damages, such Indemnified Party will give notice to the party
from whom indemnification is sought (the "Indemnifying Party").

(i) If the Indemnifying Party notifies the Indemnified Party
within 20 days after receiving notice of the claim from the Indemnified Party
that the Indemnifying Party does not dispute its obligation to the
Indemnified Party with respect to such claim and that the Indemnifying Party
desires to defend the Indemnified Party with respect to such claim for
Damages, then the Indemnifying Party will have the right to defend, at its
sole cost and expense, such claim by all appropriate proceedings, which
proceedings will be diligently prosecuted by the Indemnifying Party to a
final conclusion or will be settled at the discretion of the Indemnifying
Party (with the consent of the Indemnified Party, which consent will not be
withheld or delayed unreasonably). From the date of such notice, the
Indemnifying Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; PROVIDED, HOWEVER, that the
Indemnified Party may, at any time prior to its receipt of such notice from
the Indemnifying Party, file any motion, answer, or other pleadings that the
Indemnified Party may deem necessary or appropriate to protect its interests.

(ii) If the Indemnifying Party fails to notify the Indemnified
Party that the Indemnifying Party does not dispute its obligation to the
Indemnified Party and that the Indemnifying Party desires to defend the
Indemnified Party with respect to such claim for

<PAGE>

Damages pursuant to this Section, or if the Indemnifying Party gives such
notice but fails diligently and promptly to prosecute or settle such claim,
then the Indemnified Party will have the right to defend, at the sole cost
and expense of the Indemnifying Party, such claim by all appropriate
proceedings, which proceedings will be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or will be settled at the
discretion of the Indemnified Party. The Indemnified Party will have full
control of such defense and proceedings, including any compromise or
settlement thereof; PROVIDED, HOWEVER, that if requested by the Indemnified
Party, the Indemnifying Party agrees, at the sole cost and expense of the
Indemnifying Party, to cooperate with the Indemnified Party and its counsel
in contesting such claim.

9. TERM OF AGREEMENT AND NOTICES

9.1 TERM OF AGREEMENT. This Agreement shall remain in full force and
effect for a period of five (5) years from the Closing Date (the "Initial
Term"). At the beginning of the fifth year, AML, ALIC and AVLIC agree to and
shall enter into discussions of the method and cost of obtaining the services
to be provided to AVLIC pursuant hereto. At such time, the parties shall
consider obtaining such services from other providers based upon market
conditions at that time and shall cooperate in determining whether to
terminate this Agreement or any portions thereof and whether to obtain such
services from another source. If no agreement has been achieved with respect
to the continuation of services rendered by AML and ALIC hereunder (or any
portion thereof) with six (6) months prior to the end of the Initial Term,
then AML, ALIC and AVLIC each agree to act in good faith to secure new
agreements based upon then existing competitive market conditions. Except
to the extent the parties otherwise agree to extend this

<PAGE>

Agreement as to ALIC and/or AML (as contemplated under Section 9.2 hereof),
this Agreement will terminate at the end of the Initial Term.

9.2 PARTIAL TERMINATION. This Agreement shall be deemed severable so
that the obligations of ALIC to provide services hereunder may be terminated
(in whole, but not in part) without terminating the services of AML, and vice
versa.

9.3 TERMINATION FOR CAUSE. This Agreement (or portion hereof) may be
terminated by AVLIC at any time upon delivery of written notice to ALIC or
AML for Cause, provided that such notice shall be effective only as to the
services of the party (ALIC or AML) as to which such Cause exists.

9.4 PROVISIONS UPON TRANSFER OF SHARES. Notwithstanding the foregoing,
in the event of a sale of all of the Shares of AVLIC to AML or to ALIC
pursuant to an Auction or Unilateral Auction or other purchase and sale
transaction, this Agreement may be terminated only in accordance with the
following provisions:

(a) this Agreement shall not be terminable (other than due to the
expiration of the Initial Term) except by or at the direction of the party
purchasing the Shares during the one-year period beginning on the date such
purchase and sale is consummated; and

(b) this Agreement may be terminated by or at the direction of AVLIC
during such one-year period upon 180 days prior written notice, effective at
any time after the 180th day after giving such notice.

9.5 ACTIONS UPON TERMINATION. Upon termination, AVLIC shall
immediately pay ALIC and AML all sums due hereunder through the date of
termination for the rendition of services and ALIC and AML shall immediately
deliver to AVLIC or its designees all forms,

<PAGE>

records, statements, files, reports and other data and information prepared
or collected by ALIC and AML in connection with the performance of this
Agreement. ALIC and AML respectively shall use all reasonable efforts to
cooperate in the transition of the services and accommodations provided
hereunder as directed by AVLIC. At the request of AVLIC, ALIC and AML shall
use its best efforts to cause all employees of ALIC and AML who are employed
in rendering service, advice and assistance required hereunder to AVLIC on
the date of termination to cooperate fully with AVLIC or its designee in all
respects, including but not limited to all actions necessary to facilitate
the transfer of the servicing obligations provided for hereunder.

10. MISCELLANEOUS

10.1 NOTICES. Section 12.1 of the Joint Venture Agreement is hereby
incorporated herein in its entirety by reference thereto. Any notices to be
given to AVLIC hereunder shall be directed to AVLIC, c/o ALIC and to AVLIC,
c/o AML at the respective addresses of ALIC and AML set forth in said
agreement.

10.2 ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties hereto and supersedes all prior agreements of the parties with
respect to the subject matter contained herein. Any condition to a party's
obligation hereunder may be waived in writing by such party except as
provided herein, in the Joint Venture Agreement or in any other agreement
executed in connection therewith.

10.3 AMENDMENTS. This Agreement shall not be amended, changed,
modified, terminated or discharged in whole or in part, and no notice
requirements set forth herein shall be waived or modified, except by an
instrument in writing duly executed by AML or ALIC and all parties hereto, or
their respective successors or assigns.

<PAGE>

10.4 BINDING AGREEMENT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns and AML and ALIC, as participants in the Joint Venture, shall be
third party beneficiaries with respect to all the obligations, covenants, and
agreements set forth herein.

10.5 SEVERABLE PROVISIONS. If any provision of this Agreement shall be
found to be unenforceable by any administrative agency or court of competent
jurisdiction, such finding shall not affect the remaining provisions of this
Agreement and all other provisions herein shall remain in full force and
effect.

10.6 GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of Nebraska. ALIC, AML and AVLIC shall
appropriately comply with all applicable federal, state, and local laws and
rules, regulations or rulings issued under such laws.

10.7 ASSIGNMENT. Except as otherwise provided herein, this Agreement
shall not be assigned by any party hereto without the prior written consent
of the Joint Venture and all parties hereto.

10.8 COUNTERPARTS. This Agreement may be executed in two or more
separate counterparts, each of which shall be deemed to be an original
hereof, but all of which shall constitute one and the same instrument.

10.9 INTERPRETATION. The headings used in this Agreement are for
convenience and are not to be construed or interpreted in connection with
this Agreement. Unless the context of this Agreement otherwise requires,

(a) words using the singular or plural number also include the plural
or singular numbers, respectively;

<PAGE>

(b) the terms "hereof", "herein", "hereby", "hereto" and similar words
refer to this Agreement; and

10.10 THIRD PARTY BENEFICIARIES. The terms and provisions of this
Agreement are intended solely for the benefit of the parties hereto and their
respective successors and assignors, and it is not the intention of the
parties to confer third party beneficiary rights upon any other person.

10.11 CONSTRUCTION. The parties acknowledge that they and their
respective counsel have worked together closely in drafting, negotiating and
reviewing this Agreement and that any rule of construction to the effect that
any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the 1st day of April, 1996, effective this 1st day of April, 1996.

AMERITAS VARIABLE LIFE INSURANCE
COMPANY

By: /s/ signature
---------------------------------
Attest:

/s/ NORMAN KRIVOSHA
- ---------------------------------
Norman M. Krivosha, Secretary

<PAGE>

AMERITAS LIFE INSURANCE CORP.

By: /s/ signature
---------------------------------
Attest:

/s/ NORMAN KRIVOSHA
- ---------------------------------
Norman M. Krivosha, Secretary

AMERICAN MUTUAL LIFE INSURANCE COMPANY

By: /s/ ROGER K. BROOKS
---------------------------------
Attest:

/s/ LEE A. SCHOTT
- ---------------------------------
Lee A. Schott, Asst. Secretary

<PAGE>

EXHIBIT 1

to Management and Administrative Service Agreement dated as of April 1st, 1996
(the "Agreement")
among Ameritas Variable Life Insurance Company,
Ameritas Life Insurance Corp., and
American Mutual Life Insurance Company

This Exhibit 1 sets out the fees to be paid by AVLIC to ALIC for the services
rendered by ALIC for AVLIC under the terms of the Agreement:

(1) For services rendered by ALIC for AVLIC under Sections 2.1, 2.2,
2.5, 2.7, and 3.2 of the Agreement:

(a) A one-time fee of $136.00 for each repetitive premium variable
life contract issued by AVLIC plus an amount equal to $ .34 per
thousand of face amount of such contracts;

(b) A one-time fee equal to 22% of the first-year premium paid on
each repetitive premium variable life contract issued by AVLIC up
to the target premium on such contract and a one-time fee equal
to 6.8% of the first-year premium paid on each such contract in
excess of the target premium;

(c) A monthly maintenance charge for each in force repetitive premium
variable life contract of AVLIC equal to the sum of the
following:

(i) One-twelfth of $55.00; plus

(ii) One-twelfth of the product of $ .13 times the face amount of
such contract divided by $1,000.00;

(d) A one-time fee of $45.00 for each variable annuity contract
issued by AVLIC;

(e) A one-time fee equal to 1.25% of all premiums paid on each
variable annuity contract of AVLIC;

(f) A monthly maintenance charge for each in force variable annuity
contract of AVLIC equal to one-twelfth of $55.00;

(g) A one-time fee of $136.00 for each single premium variable life
contract issued by AVLIC plus an amount equal to $ .34 per
thousand of face amount of such contracts;

EXHIBIT 1 1 of 4

<PAGE>

(h) A one-time fee equal to 1.25% of all premiums paid on each single
premium variable life contract issued by AVLIC; and

(i) A monthly maintenance charge for each in force single premium
variable life contract of AVLIC equal to the sum of the
following:

(i) One-twelfth of $55.00; plus

(ii) One-twelfth of the product of $ .13 times the face amount of
such contract divided by $1,000.00.

(2) For investment services rendered by ALIC for AVLIC under Sections 6,
6.1, 6.2 and 6.3 of the Agreement:

(a) A monthly service charge equal to one-twelfth of 13 basis points
times the average book value of the Other Assets (as defined in
the Agreement) of AVLIC, to the extent the Other Assets do not
exceed $500,000,000; and

(b) A monthly service charge equal to one-twelfth of 10 basis points
times the average book value of the Other Assets of AVLIC which
exceed $500,000,000.

(3) The fees payable by AVLIC to ALIC under this Exhibit 1 shall be
calculated as follows:

(a) The one-time fee of $136.00 payable under Section (1)(a) above
shall be determined monthly based on the number of repetitive
premium variable life contracts issued by AVLIC during that
month;

(b) The one-time fee of $ .34 per thousand of face amount payable
under Section (1)(a) above shall be determined monthly based on
the total face amount of repetitive premium variable life
contracts issued by AVLIC during that month;

(c) The fees payable under Section (1)(b) above shall be determined
monthly based on the total first year premiums paid during that
month on repetitive premium variable life contracts issued by
AVLIC;

(d) The fees payable under Subsection (1)(c)(i) and (ii) above shall
be determined monthly based on the number of repetitive premium
variable life contracts of AVLIC which are in force at the
beginning of that month and the total face amount of such
contracts, respectively;

EXHIBIT 1 2 of 4

<PAGE>

(e) The fees payable under Section (1)(d) above shall be determined
monthly based on the number of variable annuity contracts issued
by AVLIC during that month;

(f) The fees payable under Section (1)(e) above shall be determined
monthly based on all premiums paid during that month on variable
annuity contracts of AVLIC;

(g) The fees payable under Section (1)(f) above shall be determined
monthly based on the number of variable annuity contracts of
AVLIC which are in force at the beginning of that month;

(h) The one-time fee of $136.00 payable under Section (1)(g) above
shall be determined monthly based on the number of single premium
variable life contracts issued by AVLIC during that month;

(i) The one-time fee of $ .34 per thousand of face amount payable
under Section (1)(g) above shall be determined monthly based on
the total face amount of single premium variable life contracts
issued by AVLIC during that month;

(j) The fees payable under Section (1)(h) above shall be determined
monthly based on the total premiums paid during that month on
single premium variable life contracts issued by AVLIC; and

(k) The fees payable under Section (1)(i) above shall be determined
monthly based on the number of single premium variable life
contracts of AVLIC which are in force at the beginning of that
month and the total face amount of such contracts, respectively.

(l) The fees payable under Section (2) above shall be determined
monthly based on the average of the Other Assets at the beginning
and end of that month.

(4) In making the calculations described in Section (3) above, reductions
will be made for contracts issued but not delivered or returned during
the "free look period" and for the premiums related thereto and for
similar occurrences.

(5) The term "premiums," as used herein, shall include all premium
payments and other deposits of any kind whatsoever made by
policyholders in respect of Variable Products of AVLIC.

EXHIBIT 1 3 of 4

<PAGE>

(6) The term "issued" shall include any policy issued or reissued by AVLIC
other than a policy issued in substitution for a policy issued by
AVLIC within the prior twelve-month period.

(7) The fees detailed herein are for (a) all existing AVLIC Variable
Products; and (b) any newly ssued products which are substantially
similar to the Variable Products which are then currently issued by
AVLIC. The fees to be paid hereunder with respect to any Variable
Product which is not substantially similar to a Variable Product
described in the preceding sentence shall be determined by the parties
to the Agreement prior to the introduction of such Variable Product.

EXHIBIT 1 4 of 4

<PAGE>

EXHIBIT 2
to Management and Administrative Service Agreement dated as of April 1st, 1996
(the "Agreement")
among Ameritas Variable Life Insurance Company,
Ameritas Life Insurance Corp., and
American Mutual Life Insurance Company

This Exhibit 2 sets out the fees to be paid by AVLIC to AML for the services
rendered by AML for AVLIC under the terms of the Agreement:

(1) For services rendered by AML for AVLIC under Section 2.3, 2.4,
2.6, 2.7 and 3.3 of the Agreement:

(a) A one-time fee of $90.00 for each Fixed Annuity issued by AVLIC;

(b) A monthly maintenance charge for each in force Fixed Annuity of
AVLIC equal to one-twelfth of $31.00;

(c) A one-time marketing expense charge equal to 3.5% of the total
distribution expense allowance (expressed as a percentage of
total premiums) built into each Fixed Annuity issued by AVLIC.
For example, a calculation of that percentage on total first year
premiums on Fixed Annuities issued by AVLIC is as follows:

(i) Advantage Bonus and Advantage Plus - Total distribution
expense allowance of 6.65% of the total first year premiums
times the marketing expense charge of 3.5% equals 23.3 basis
points; and

(ii) Advantage MVA - Total distribution expense allowance of
7.00% of the total first year premiums times the marketing
expense charge of 3.5% equals 24.5 basis points; and

(d) A similar one-time marketing expense charge equal to 3.5% of the
total distribution expense allowance (as reduced for years after
the first policy year) built into each Fixed Annuity issued by
AVLIC for premiums after the first year.

(2) For investment services rendered by AML for AVLIC under Sections 5,
5.1, 5.2 and 5.3 of the Agreement:

EXHIBIT 2 1 of 3

<PAGE>

(a) A monthly service charge equal to one-twelfth of 13 basis points
times the average book value of the Fixed Annuity Assets of
AVLIC, to the extent the Fixed Annuity Assets do not exceed
$500,000,000; and

(b) A monthly service charge equal to one-twelfth of 10 basis points
times the average book value of the Fixed Annuity Assets of AVLIC
which exceed $500,000,000.

(3) The fees payable by AVLIC to AML under this Exhibit 2 shall be
calculated as follows:

(a) The fees payable under Sections (1)(a) above shall be
determined monthly based on the number of Fixed Annuities
issued by AVLIC during that month;

(b) The fees payable under Section (1)(b) above shall be determined
monthly based on the number of Fixed Annuities of AVLIC which are
in force at the beginning of that month;

(c) The fees payable under Sections (1)(c) and (d) above shall be
determined monthly based on the amount of premiums received
during that month on Fixed Annuities issued by AVLIC; and

(d) The fees payable under Section (2) above shall be determined
monthly based on the average of the Fixed Annuity Assets at the
beginning and end of that month.

(4) In making the calculations described in Section (3) above, reductions
will be made for Fixed Annuities issued but not delivered or returned
during the "free look period" and for the premiums related thereto and
for similar occurrences.

(5) The term "premiums," as used herein, shall include all premium
payments and other deposits of any kind whatsoever made by
policyholders in respect of Fixed Annuities of AVLIC.

(6) The term "issued" shall include any policy issued or reissued by AVLIC
other than a policy issued in substitution for a policy issued by
AVLIC within the prior twelve-month period.

(7) The fees determined herein are for (a) all existing AVLIC Fixed
Annuities; (b) all Fixed Annuities which are issued by AVLIC which are
substantially similar to Fixed Annuities currently sold by AML; and
(c) any newly issued products which are substantially similar to the
Fixed Annuities which are then currently sold by

EXHIBIT 2 2 of 3

<PAGE>

AVLIC. The fees to be paid hereunder with respect to any Fixed
Annuity product which is not substantially similar to the Fixed
Annuity products described in the preceding sentence shall be
determined by the parties to the Agreement prior to the
introduction of such Fixed Annuity product.

EXHIBIT 2 3 of 3

<PAGE>
A PROPOSAL FOR

MANAGEMENT SERVICES

611 FIFTH AVENUE AND
THE 13TH & CHERRY STREET ANNEX

DES MOINES, IOWA 50309

PREPARED FOR:

CENTRAL LIFE ASSURANCE COMPANY

611 FIFTH AVENUE

DES MOINES, IOWA 50309

PREPARED BY:

CENTRAL PROPERTIES, INC.

6000 WESTOWN PARKWAY, SUITE 33OW

WEST DES MOINES, IOWA 50266

<PAGE>

TABLE OF CONTENTS

PAGE
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Management Contract 1

Introductory Provisions 1

Article I - Appointment
Section 1.01. Exclusive Agency - Appointment 1
Section 1.02. Term 1
Section 1.03. Acceptance of Appointment 2

Article II - The Owner's Representation 2

Article III - The Manager's Authority 2
Section 3.01. General Authority 2
Section 3.02. Renting and Leasing 2
Section 3.03. Repairs and Maintenance 3
Section 3.04. Collection of Rents and Charges 3
Section 3.05. Security Deposits 3
Section 3.06. Personnel 3
Section 3.07. Service Contracts 4
Section 3.08. Disbursements 4

Article IV - Duties and Obligations of the Manager
Section 4.01. Maintenance & Repair of the Property 5
Section 4.02. Books and Records 5
Section 4.03. Returns Required by Law 5
Section 4.04. Collections and Bank Accounts 5
Section 4.05. Disbursements 5
Section 4.06. Monthly Reports 5
Section 4.07. Time Devoted 6

Article V - Termination
Section 5.01. Termination 6
Section 5.02. Damage, Destruction, Sale or
Condemnation 6
Section 5.03. Bankruptcy, Reorganization and
Insolvency 6
Section 5.04. Effect of Termination and
Termination Fund 7

Article VI - Compensation of the Manager
Section 6.01. Management 7
Section 6.02. Payment of Compensation 7
Section 6.03. Additional Services 7

Article VII - Definitions
Section 7.01. Gross Receipts 7

<PAGE>

TABLE OF CONTENTS
(cont.)

PAGE
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Article VII - Definitions (cont.)
Section 7.02. Net Proceeds 8

Article VIII - Miscellaneous Provisions
Section 8.01. Leasing Policies 8
Section 8.02. Not a Partnership 8
Section 8.03. Indemnity 8
Section 8.04. Insurance 9
Section 8.05. The Owner's Representative 9
Section 8.06. Entire Agreement 9
Section 8.07. Headings 9
Section 8.08. Consent and Approval 9
Section 8.09. Waiver of Subrogation 10
Section 8.10. Notices 10
Section 8.11. Governing Law 11
Section 8.12. Binding Effect 11
Section 8.13. Agent's Sign 11
Section 8.14. Other Provisions 11

Exhibit A 12

Schedule A 13

Schedule B 14

<PAGE>

CENTRAL PROPERTIES, INC.

MANAGEMENT CONTRACT

This Management Contract (the "Contract") is entered into as of the 1st day
of JANUARY, 1993, by and between CENTRAL LIFE ASSURANCE COMPANY, (the "Owner")
and CENTRAL PROPERTIES, INC., a corporation organized and existing under the
laws of the State of Iowa (the "Manager");

INTRODUCTORY PROVISIONS:

The following provisions are a part and form the basis of this
Contract:

A. The Manager desires to manage, rent, lease and operate that certain
office building project commonly known as 611 FIFTH AVENUE AND THE 13TH AND
CHERRY STREET ANNEX, located in DES MOINES, IOWA 50309, such project being more
fully described on EXHIBIT "A" which is attached hereto and incorporated herein
by reference for all purposes (the "Property"); and

B. The Owner desires to engage and employ the Manager to
rent, operate and manage the Property:

NOW THEREFORE, in consideration of the mutual promises hereunder and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

APPOINTMENT

SECTION 1.01. EXCLUSIVE AGENCY - APPOINTMENT. The Owner hereby engages,
appoints and employs the Manager to rent, operate, and manage the Property as
the Owner's sole and exclusive agent with the exclusive right to lease the
Property during the term of this Contract, upon the terms and conditions
hereinafter set forth.

SECTION 1.02. TERM. The term of the appointment of the Manager shall
commence as of JANUARY 1, 1993 and shall continue through and including DECEMBER
31, 1993 (the "Term"), unless earlier terminated as hereinafter provided.

<PAGE>

SECTION 1.03. ACCEPTANCE OF APPOINTMENT. The Manager accepts the
engagement, appointment and employment by the Owner hereunder to the extent, for
the period, and upon the terms herein provided.

ARTICLE II

THE OWNER'S REPRESENTATION

The Owner hereby represents, undertakes, warrants and agrees:

(a) that the Owner has full right and authority to enter into this
Agreement, perform its obligations hereunder and engage, appoint and employ the
Manager for the purposes and consideration herein set forth;

(b) that the Owner is duly organized, existing and in good standing
under the laws of the United States of America and the State of Iowa and is duly
authorized and qualified to do business in the State of Iowa;

(c) to waive, release and relinquish any and all claims which the
Owner may have against Manager for damages to the Property or any personal
property located on the Property to the extent that such damages are covered by
the Owner's insurance policies.

ARTICLE III

THE MANAGER'S AUTHORITY

SECTION 3.01. GENERAL AUTHORITY. The Manager shall have the exclusive
authority, right and power to rent, operate, and manage the Property (all or any
of which, at Manager's option, may be exercised in the name of the Owner).
Except as specifically set forth in this contract, all obligations or expenses
incurred by the Manager pursuant to its authority hereunder shall be for the
benefit of, account of, or behalf of and at the expense of the Owner, and the
Owner expressly agrees to assume and pay any and all such expenses and
obligations.

SECTION 3.02. RENTING AND LEASING. The Manager shall have the specific
authority to advertise the Property for rent or lease and in connection with
such activities undertake any or all of the following: (a) investigate
references of prospective tenants; (b) negotiate leases and rental agreements
(subject to prior written approval of Owner); (c) amend, renew, extend, expand,
modify or cancel the existing leases and rental agreements and prepare any new
leases and rental agreements (subject however to the prior written approval of
the Owner); (d) terminate tenancies and sign and serve such notices as are
deemed appropriate by the Manager;

<PAGE>

(e) institute and prosecute all actions, at Manager's option, (in the name of
the Owner, the Property or the Manager) to remove tenants and recover possession
of the portion of the Property occupied by any tenant; (f) prepare and
disseminate signs, plans, brochures and other advertising materials and (g)
engage attorneys for any matter deemed appropriate by the Manager, subject to
Owner's prior written approval.

SECTION 3.03. REPAIRS AND MAINTENANCE. The Manager shall have the specific
authority on behalf of and at the expense of Owner to (a) make or cause to be
made all ordinary repairs and replacements necessary to preserve the Property in
its present condition; (b) make all alterations required to comply with lease
requirements; (c) remodel portions of the Property; (d) negotiate contracts for
non-recurring items not exceeding FIVE THOUSAND Dollars ($5,000.00) without the
prior written approval of the Owner; provided, however, monthly or recurring
operating charges and emergency repairs may be incurred in excess of such
maximum, if in the opinion of the Manager, such repairs are necessary to protect
the Property from damage or to maintain services to the tenants as called for in
their leases; (e) enter into contracts for all necessary repairs, maintenance,
minor alterations and utility services; (f) pay all bills incidental to the
Property; and (g) place orders on behalf of the Owner for such equipment, tools,
appliances, materials and supplies as are reasonable and necessary to properly
maintain the Property. Manager agrees to annually furnish Owner an up-to-date
inventory list of equipment, tools and appliances owned by Owner and used in the
operation of the Property.

SECTION 3.04. COLLECTION OF RENTS AND CHARGES. The Manager shall have the
specific authority, if authorized under the applicable lease, to collect (a)
rents and assessments and other items due or to become due, give receipts
therefore and deposit all funds collected hereunder in the bank account provided
for and described in SECTION 4.04, (b) a late rent administrative charge; (c) a
charge for non-negotiable checks; (d) a fee for credit reports; and (e) an
administrative charge for subleasing.

SECTION 3.05. SECURITY DEPOSITS. The Manager shall have the right to
collect security deposits and deposit such funds to an account specified by the
Owner from time to time. Manager shall have the right to refund tenant's
security deposits at the expiration of leases.

SECTION 3.06. PERSONNEL. The Manager shall have the express authority to
investigate, hire, train, promote, pay, supervise and discharge all personnel
reasonably necessary in order to properly maintain and operate the Property,
including without limitation, those shown on SCHEDULE-B. The rates set forth on
Schedule B shall be in force for a period of one year, at the end of which, such
fees shall be equitably adjusted. Such personnel shall not be

<PAGE>

deemed employees of the Owner, who shall have no right to supervise or direct
such employees. All reasonable salaries, wages or personnel employed by the
manager, including but not limited to the cost of group medical and health
insurance, social security taxes, federal and state unemployment taxes,
Workman's Compensation Insurance and vacations shall be deemed to be expenses
reimbursable to the Manager by the Owner.

SECTION 3.07. SERVICE CONTRACTS. The Manager shall have the authority, in
the name and on behalf of the Owner, to enter into contracts for water,
electricity, gas fuel, window cleaning, telephone, vermin extermination, trash
removal, janitorial service, laundry service, landscaping and lawn care,
elevator, security and other necessary services deemed by the Manager to be
necessary or advisable for the operation of the Property.

SECTION 3.08. DISBURSEMENTS. Notwithstanding any other provision to the
contrary herein contained, the Manager is hereby expressly authorized to
disburse funds, on or before the tenth (10th) day of the following month during
the term of this Contract, to the following parties in the order set forth
below:

(1) to the Manager for monies advanced by the Manager on behalf of
the Owner (provided, however that the Manager shall in no event have any
obligation to advance any monies on behalf of the Owner);

(2) amounts otherwise due and payable as operating expenses of the
Property authorized to be incurred under the other terms of this Contract,
including the Manager's compensation;

(3) to the Owner the Net Proceeds (as defined in SECTION 7.02), on or
before the FIFTEENTH (15TH) day of the following month and after establishing a
cash reserve in the amount of TEN THOUSAND Dollars ($10,000.00) to pay other
costs and expenses incidental to the operation of the Property, including non-
recurring emergency repairs. Sufficient funds for capital expenditures which
shall become due and payable within the succeeding calendar month and for which
the cash to make such payments may not be generated by operations during such
period shall be retained in addition to the cash reserve established above.

<PAGE>

ARTICLE IV

DUTIES AND OBLIGATIONS OF THE MANAGER

SECTION 4.01. MAINTENANCE AND REPAIR OF THE PROPERTY. The Manager shall,
at the Owner's sole expense, cause the property to be maintained in accordance
with standards reasonably acceptable to the Owner, including without limitation,
interior and exterior cleaning, painting, plumbing and carpentry.

SECTION 4.02. BOOKS AND RECORDS. The Manager shall keep books of account
and such other records reflecting the results of operation of the Property.
Such books and records shall be kept in all material respects in accordance with
accepted accounting practices. The Manager shall allow the Owner, its
accountants, attorneys and agents, the right to enter to examine or inspect the
books and records relating to the operation and maintenance of the Property at
any time during normal business hours upon notification to the Manager. Books
and records of the Property shall be kept at the Property or such other place as
the Manager may deem appropriate.

SECTION 4.03. RETURNS REQUIRED BY LAW. The Manager shall execute and file
punctually when due, all forms, reports and returns required by law relating to
personnel employed by the Manager for the maintenance and operation of the
Property.

SECTION 4.04. COLLECTIONS AND BANK ACCOUNTS. The Manager shall deposit all
sums collected pursuant to this Contract (less any sums properly deducted as
provided herein) in a trust account in a national or state bank mutually
acceptable to the Owner and the Manager. Such accounts shall be styled:
"Central Properties, Inc. - AS AGENT FOR CENTRAL LIFE ASSURANCE COMPANY" and
shall be maintained at all times separate from the Manager's corporate accounts.
The Manager shall endeavor to collect on behalf of the Owner and at Owner's
expense, all rents and other charges for the use and occupancy of the Property
on a periodic basis no less often than once each calendar month.

SECTION 4.05. DISBURSEMENTS. The Manager shall make disbursements in
accordance with the authority as set forth in SECTION 3.08 hereof. In the event
the disbursements required under SECTION 3.08 (1) and (2) hereof shall be in
excess of receipts from the Property, the Owner agrees to pay to the Manager the
amount necessary to restore the balance in the account to the amount specified
in SECTION 3.08 (3) immediately upon notification by Manager. No provision of
this Contract shall in any manner obligate the Manager to advance its own funds
on behalf of the Owner for any purpose.

SECTION 4.06. MONTHLY REPORTS. The Manager shall on the same day as
stipulated in SECTION 3.08 deliver a written report of the

<PAGE>

previous month's operations to the Owner, which report shall include a complete
listing of all receipts and disbursements, and the amount, if any, payable by
the Owner to restore the balance in the account as provided in SECTION 4.05
hereof.

SECTION 4.07. TIME DEVOTED. The Manager shall devote such of its time,
attention and business capacity to the management and operation of the Project
as may be necessary in order for Manager to fully comply with the terms of this
Agreement. It is understood and agreed that the Manager has, may continue to
have, and hereafter may engage in other similar or related businesses, even
though such other businesses may be in competition with the Project.

ARTICLE V

TERMINATION

SECTION 5.01. TERMINATION. Notwithstanding anything in this document to
the contrary, either party may terminate this agreement with or without cause by
giving to the other party thirty (30) days written notice. After the expiration
of the initial Term hereof, this Contract shall thereafter continue from year to
year until terminated, with or without cause by either party, which termination
shall be effective thirty (30) days after receipt of written notice from the
terminating party.

SECTION 5.02. DAMAGE, DESTRUCTION, SALE OR CONDEMNATION. In the event of
damage to or destruction of the Property so that the same shall become
untenantable, or in the event of taking of a substantial portion of the
Property, by condemnation or threat thereof, or similar proceeding, or in the
event of sale of the Property; then, in any such event this Contract may be
terminated by the Owner which termination shall be effective THIRTY (30) days
after receipt by Manager of written notice from the Owner.

SECTION 5.03. BANKRUPTCY, REORGANIZATION AND INSOLVENCY. In the event a
receiver, liquidator or trustee of the Manager shall be appointed by court order
or if a petition shall be filed against the Manager under any bankruptcy,
reorganization or insolvency laws and such petition shall not have been vacated
within one hundred and twenty (120) days of the date of filing or in the event
the Manager shall make an assignment for the benefit of creditors or be
adjudicated a bankrupt under the federal bankruptcy laws, then the Owner may
forthwith terminate this Contract upon written notice to the Manager.

<PAGE>

SECTION 5.04. EFFECT OF TERMINATION AND TERMINATION FUND. Upon termination
pursuant to this ARTICLE V, the Manager and the Owner shall have no further
duties and obligations, one to another save and except Owner's obligations under
Article VI and SECTION 8.03; provided that in the event of termination as
provided for herein, the Manager will remit to Owner gross collections and net
proceeds as called for herein on the effective date of termination and Owner
agrees to insure that all bills, fees (inclusive of Manager's fees and
commissions) and charges attributable to the Property have been fully paid.
Upon the effective date of termination, the Manager shall deliver to the Owner a
final report.

ARTICLE VI

COMPENSATION OF THE MANAGER

SECTION 6.01. MANAGEMENT. The Owner agrees to pay the Manager for its
services as Manager under this Contract, a management fee ("Management Fee") of
Four Thousand Four Hundred Fifty Dollars ($4,450.00) for each month of the term
of this Contract. Owner shall pay to Manager such other fees relating to
management and construction administration as are set forth in SCHEDULE A.

SECTION 6.02. PAYMENT OF COMPENSATION. The compensation payable under
SECTION 6.01 hereof shall be payable on the same day as stipulated in SECTION
3.08, following the month for which such compensation is due and shall be
deducted from Gross Receipts prior to remitting the Net Proceeds to the Owner
pursuant to SECTION 3.08 hereof.

SECTION 6.03. ADDITIONAL SERVICES. If Manager's agent is called upon to
perform any services not customarily a part of the usual services performed by a
management agent, it is agreed that Manager shall receive additional
compensation in an amount agreed upon and approved by Owner, in writing, in a
manner in which both parties agree.

ARTICLE VII

DEFINITIONS

SECTION 7.01. GROSS RECEIPTS. The term "Gross Receipts" shall mean all
amounts actually collected by the Manager as rents or other charges for use and
occupancy of the Property including parking, receipts from coin operated
machines and other miscellaneous receipts collected by the Manager from the
Property but shall exclude all other receipts including but not limited to,
income derived from interest on investments or otherwise, proceeds of claims on
account of insurance policies, abatement of taxes, and awards arising from
eminent domain proceedings or the threat thereof, discount, deposits and
dividends on insurance policies.

<PAGE>

SECTION 7.02. NET PROCEEDS. The term "Net Proceeds" shall mean Gross
Receipts for each calendar month less (i) the sum of all disbursements properly
made by the Manager during each calendar month pursuant to the authority granted
the Manager under this contract and (ii) the compensation payable to the Manager
for the calendar month under this Contract, including without limitation,
management fees, leasing commission, and construction administration fees.

ARTICLE VIII

MISCELLANEOUS PROVISIONS

SECTION 8.01. LEASING POLICIES. The Manager shall have the authority to
determine and control all leasing policies, subject to Owner's approval, in
relation to the Property and the Owner expressly agrees to the following:

(a) An adequate supply of forms of lease agreements and all
attachments and addenda necessary thereto will be at all times provided to the
Manager by the Owner;

(b) the Manager is authorized, subject to Owner's approval, to
employ, at the expense of the Owner, a space planner in order to expedite lease
proposals, and to provide working drawings to the on-site manager for assistance
in construction of the leased space;

(c) all inquiries concerning leases, renewals, expansions,
extensions, continuations of tenancy, or agreements for the rental, occupancy or
operation of the Property, or any part thereof, shall be referred to the
Manager, and all negotiations connected therewith shall be conducted solely by
or under direction of the Manager; and

(d) Owner agrees to provide at Owner's expense a maintenance work
area/office as approved by Owner.

SECTION 8.02. NOT A PARTNERSHIP. Nothing contained in this Contract shall
constitute or be construed to be, or create, a partnership or joint venture
between the Owner and the Manager, or their successors and assigns and the
Manager is, shall be and remain an independent contractor.

SECTION 8.03. INDEMNITY. The Manager hereby agrees to indemnify, defend
and hold harmless the Owner from any cost, loss, damage or expense resulting
from the breach of this Agreement by Manager, except to the extent same
constitutes the negligence of Manager.

<PAGE>

SECTION 8.04. INSURANCE. The Owner agrees to carry, at his own expense,
necessary public liability, fire and extended coverage insurance adequate to
protect the interests of the parties hereto, which policies shall be so written
as to protect the Manager in the same manner to the same extent they protect the
Owner, and will name the Manager as an additional insured. Manager agrees to
carry, at his own expense, necessary public liability and workman's compensation
insurance. The Manager is allowed to include a proportionate share of workman's
compensation insurance premium as a component of salary/wages reimbursement.
The policies shall be so written as to protect the Owner in the same manner to
the same extent they protect the Manager, and will name the Owner as an
additional insured.

Owner agrees to furnish the Manager certificates evidencing the existence
of the insurance coverage set forth in this paragraph which certificates shall
provide that the Manager shall receive at least thirty (30) days notice from the
insurance carrier prior to cancellation or material alteration of any insurance
coverage. Unless the Owner shall provide such insurance and furnish such
certificates within thirty (30) days from the date of this Contract, the Manager
may, but shall not be obligated to, place said insurance (including retroactive
coverage of up to two (2) years) and charge the cost thereof to the account of
the Owner. Manager agrees to furnish Owner certificates evidencing the
existence of the insurance coverage set forth in this paragraph.

SECTION 8.05. THE OWNER'S REPRESENTATIVE. In connection with decisions
required by the Owner under this Contract, the Owner acknowledges that immediate
decisions will be necessary and accordingly designates JOE SYATA/KEITH
GUNZENHAUSER, as its representative, who shall be readily available to make such
decisions. The Owner may change such designated representative by written
notice to the Manager.

SECTION 8.06. ENTIRE AGREEMENT. This Contract constitutes all of the
understandings and agreements of whatever nature or kind existing, of which the
Manager is a party, with respect to the Manager's operation and management of
the Property. The Manager makes no guarantees, warranties or representations
that there will be profits or that there will not be losses from the operation
of the Property.

SECTION 8.07. HEADINGS. The article and section headings contained herein
are for convenience of reference only and are not intended to define, limit or
describe the scope or intent of any provision of this Contract.

SECTION 8.08. CONSENT AND APPROVAL. Whenever under any provision of this
Contract the approval or consent of either party is required, the decision
thereon shall be promptly given and such approval or consent shall not be
unreasonably withheld or delayed.

<PAGE>

It is further understood and agreed that whenever, under any provision of this
Contract, approval or consent is required, the approval or consent shall be
deemed to have been duly given if such approval or consent is given by the
person executing this Contract or any other person, as the case may be,
designated in SECTION 8.05 hereof. The Manager may rely exclusively and
conclusively on the designation set forth in SECTION 8.05 hereof.

SECTION 8.09. WAIVER OF SUBROGATION. Owner and Manager hereby waive any
rights each may have against the other on account of any loss or damage
occasioned to Owner or Manager, as the case may be (whether or not such loss or
damage is caused by the fault or negligence of the other party), to their
respective property, or to any portion of the property arising from any risk
covered by the standard form of fire and extended coverage insurance used in the
State of Iowa at the time of the loss or damage. If a party waiving rights
under this Section is carrying a fire and extended coverage insurance policy in
the standard form used in the State of Iowa and an amendment to such standard
form is passed, such amendment shall be deemed not a part of such standard form
until it applies to the policy being carried by the waiving party. The parties
hereto each, on behalf of their respective insurance companies insuring the
property of either Owner or Manager against any such loss, waive any right of
subrogation that it may have against the other party. Owner and Manager agree
immediately to give to their respective insurer written notification of the
terms of the mutual waivers contained in this Section, and to have said
insurance policies properly endorsed, if necessary, to prevent the invalidation
of said insurance coverages by reason of said waivers.

SECTION 8.10. NOTICES. Any notice by any party to any other party shall be
in writing and shall be given, and be deemed except as otherwise provided in
this Contract, to have been duly given (i) when actually received if delivered
personally or (ii) five (5) days after deposit in the United States mail, in a
registered or certified postage paid envelope, return receipt, addressed to the
respective parties as follows:

OWNER: CENTRAL LIFE ASSURANCE COMPANY
611 FIFTH AVENUE
DES MOINES, IOWA 50309

ATTN: KEITH GUNZENHAUSER

MANAGER: CENTRAL PROPERTIES, INC.
6000 WESTOWN PARKWAY, SUITE 33OW
WEST DES MOINES, IOWA 50266

ATTN: EVAN L. OSTER

<PAGE>

Either party may at any time change the address for notices to such party
by the delivery or mailing, as aforesaid, of a notice stating the change and
setting forth the changed address.

SECTION 8.11. GOVERNING LAW. This Contract shall be deemed to have been
made and shall be construed and interpreted in accordance with the laws of the
State of Iowa.

SECTION 8.12. BINDING EFFECT. This Contract shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns.

SECTION 8.13. AGENT'S SIGN. Owner hereby grants Agent the privilege of
displaying Agent's sign in and upon said premises announcing that said premises
is under Agent's management. Sign and design shall be subject to Owner's
approval.

SECTION 8.14. OTHER PROVISIONS.

Schedule A - Management Fees
Schedule B - Reimbursable Employees

EXECUTED on the 15TH day of JANUARY, 1993.

OWNER:

CENTRAL LIFE ASSURANCE COMPANY

By: /s/ Keith Gunzenhauser
------------------------------------
KEITH GUNZENHAUSER

MANAGER:

CENTRAL PROPERTIES, INC.

By: /s/ Evan L. Oster
-------------------------------------
EVAN L. OSTER

<PAGE>

EXHIBIT "A"

TO MANAGEMENT AND LEASING CONTRACT

BETWEEN

CENTRAL LIFE ASSURANCE COMPANY ("OWNER")

AND

CENTRAL PROPERTIES, INC. ("MANAGER")

PROPERTY DESCRIPTION

Lots One (1), Two (2), Three (3) and Four (4)
(except the West 7 feet thereof) and the South 5.0
feet of Park Street right-of-way lying North of
and adjoining Lot 1 in Block "K" in Grimmel's
Addition to the Town of Fort Des Moines.

All of the 9-foot strip lying between Lots One
(1), Two (2), Three (3) and Four (4) in Block "K",
in Grimmel's Addition to the Town of Fort Des
Moines and the North 60.5 feet of Lot Eight (8),
all of Lots Nine (9), Ten (10), and Eleven (11)
and the South 12.65 feet of Lot Twelve (12) in Van
Buskirk's Addition to Fort Des Moines all now
included in and forming a part of the City of Des
Moines, Iowa.

Lots Five (5) and Six (6) in Block 30 in Keene and
Poindexter's Addition to Fort Des Moines, now
included in and forming a part fo the City of Des
Moines, Iowa.

<PAGE>

SCHEDULE A

1. For the management services provided for the 611 FIFTH AVENUE BUILDING AND
THE 13TH AND CHERRY STREET ANNEX, Central Properties, Inc. will be paid a
management fee of Four Thousand Four Hundred Fifty Dollars ($4,450.00) for each
month of the term of the contract.

2. A construction and administration fee of FIVE percent (5%) of any
extensive construction or repair job where the Manager coordinates the services
of outside contractors will be billed to the Owner if such service is requested
by Owner of the Manager.

3. All personnel directly involved with the 611 FIFTH AVENUE BUILDING AND
THE 13TH AND CHERRY STREET ANNEX shall be charged to the property on a pro-rata
or hourly basis as provided under SCHEDULE B.

LEASING COMMISSIONS AND FEES:

1. It is agreed by and between the parties hereto, that in the event Central
Properties, Inc., (Agent) leases any office space to anyone other than Central
Life Assurance Company or its subsidiaries (Owner) in the Central Life Assurance
Company Building, 611 Fifth Avenue, Des Moines, Iowa, Owner shall pay Central
Properties, Inc., a 2% lease commission on the gross amount of the lease. Said
commission shall be paid no later than the date the tenant occupies the space.

2. It is further agreed that Central Properties, Inc., shall be paid a 1%
commission on the gross amount of any lease renewals negotiated with tenants
currently occupying office space in the building, excluding Owner or its
subsidiaries. Said commission shall be paid when any new lease has been entered
into.

It is further agreed that Owner shall pay a normal commission rate to any
real estate company, including Iowa Realty. Said commission shall be paid when
new lease has been entered into.

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

APPROVED: DATE: JANUARY 15, 1993
--------------------

Owner: Central Life Assurance Co. By: /s/ Keith Gunzenhauser
------------------------- --------------------
Keith Gunzenhauser

Manager: Central Properties, Inc. By: /s/ Evan L. Oster
----------------------- ----------------------
Evan L. Oster

<PAGE>

SCHEDULE B

REIMBURSABLE EMPLOYEES

Property: 611 Fifth Avenue and the 13th and Cherry Street Annex
Des Moines, IA 50309

Recommended Fidelity Bond
Wage or Salary or Employee
(Net of Benefits) Dishonesty
No. With Allocated to Coverage
Employee Title Title Building (Y or N)
- --------------- -------- ---------------- ------------

ON-SITE:

Supervisor, Building Department 1 $34,000 Y
Operating Engineer 4 $24,000 Y

NOTE 1: Each of the above employees will be billed to the properties as full-
time employees or pro-rata.

OFF-SITE:

Director of Engineering/ $40.00/hr. Y
Maintenance (Flat Rate)

NOTE 2: This schedule outlines "not-to-exceed" amounts for the primary year of
the Contract, only. Owner agrees to increase the above salaries by an equitable
amount. Each of the above employees will be billed based on hours spent
directly related to the buildings. The quantity of time expended will vary
according to seasonal variations, site specific requirements and Owner's goals.

<PAGE>

_____________________________________________________

AMERICAN MUTUAL AFFORDABLE HOUSING PARTNERS, L.P.

_____________________________________________________

AMENDED AND RESTATED AGREEMENT

OF LIMITED PARTNERSHIP

Dated as of September 1, 1995

<PAGE>

AMERICAN MUTUAL AFFORDABLE HOUSING PARTNERS, L.P.

TABLE OF CONTENTS
------------------

Page
----

SECTION 1. NAME AND BUSINESS. . . . . . . . . . . . . . . . . . . . . . . 5
1.1 Name; Continuation. . . . . . . . . . . . . . . . . . . 5
1.2 Offices and Registered Agent. . . . . . . . . . . . . . 5
1.3 Names and Addresses of Partners . . . . . . . . . . . . 6
1.4 Purpose . . . . . . . . . . . . . . . . . . . . . . . . 6
1.5 Term and Dissolution. . . . . . . . . . . . . . . . . . 6

SECTION 2. DEFINED TERMS. . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Cross References. . . . . . . . . . . . . . . . . . . . 14

SECTION 3. CAPITAL CONTRIBUTIONS AND ADMISSION OF LIMITED PARTNERS. . . . 15
3.1 Contribution of General Partner . . . . . . . . . . . . 15
3.2 Withdrawal of Original Limited Partner;
Admission of Investor Limited Partners . . . . . . . . 15
3.3 Contribution of Investor Limited Partners . . . . . . . 16
3.4 No Pledge or Assignment of Proceeds by
General Partner. . . . . . . . . . . . . . . . . . . . 18
3.5 Defaults. . . . . . . . . . . . . . . . . . . . . . . . 18
3.6 Capital Accounts. . . . . . . . . . . . . . . . . . . . 19
3.7 Interest; Return of Capital . . . . . . . . . . . . . . 19
3.8 Special Rights of Limited Partners. . . . . . . . . . . 19
3.9 Meetings. . . . . . . . . . . . . . . . . . . . . . . . 20
3.10 Redemption of Partnership Interests . . . . . . . . . . 20

SECTION 4. PROFITS AND LOSSES; DISTRIBUTIONS; CAPITAL ACCOUNTS. . . . . . 20
4.1 Profits, Losses and Tax Credits . . . . . . . . . . . . 20
4.2 Cash Distributions Prior to Dissolution . . . . . . . . 23
4.3 Termination Distributions . . . . . . . . . . . . . . . 23
4.4 Special Provisions. . . . . . . . . . . . . . . . . . . 24

SECTION 5. RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNER . . . . . . . 27
5.1 Business Management; Tax Matters Partner. . . . . . . . 27
5.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . 28
5.3 Restrictions on Authority; Additional Obligations . . . 30
5.4 Duties and Obligations of the General
Partner. . . . . . . . . . . . . . . . . . . . . . . . 32
5.5 Duties and Obligations with respect to
Environmental Matters. . . . . . . . . . . . . . . . . 33
5.6 Other Activities. . . . . . . . . . . . . . . . . . . . 34
5.7 Distributions . . . . . . . . . . . . . . . . . . . . . 34

Page 2 of 55
<PAGE>

5.8 Certain Payments. . . . . . . . . . . . . . . . . . . . 34
5.9 Agreements With Operating Partnerships. . . . . . . . . 36
5.10 Partnership Reserves and Payment of Expenses. . . . . . 37
5.11 Limitation of Liability; Indemnification. . . . . . . . 38
5.12 Affiliates. . . . . . . . . . . . . . . . . . . . . . . 39
5.13 Borrowings. . . . . . . . . . . . . . . . . . . . . . . 39
5.14 Delegation of General Partner Authority . . . . . . . . 40
5.15 Execution of Instruments. . . . . . . . . . . . . . . . 40
5.16 Purchase of Certain Operating Partnership
Interests. . . . . . . . . . . . . . . . . . . . . . . 41

SECTION 6. RIGHTS AND LIABILITIES OF LIMITED PARTNERS . . . . . . . . . . 41
6.1 Liability of Limited Partners . . . . . . . . . . . . . 41
6.2 No Right to Manage, Dissolve or Partition . . . . . . . 41
6.3 Priority. . . . . . . . . . . . . . . . . . . . . . . . 41
6.4 Death or Disability of Limited Partner. . . . . . . . . 42

SECTION 7. TRANSFERABILITY OF LIMITED PARTNER INTERESTS . . . . . . . . . 42
7.1 Assignments . . . . . . . . . . . . . . . . . . . . . . 42
7.2 Substituted Investor Limited Partners . . . . . . . . . 43
7.3 Restrictions; Additional Limited Partners . . . . . . . 43

SECTION 8. WITHDRAWAL OF A GENERAL PARTNER;
DISPOSITION OF A GENERAL PARTNER'S INTEREST . . . . . . . . . 44
8.1 Transfer and Withdrawal . . . . . . . . . . . . . . . . 44
8.2 Obligation to Continue. . . . . . . . . . . . . . . . . 45
8.3 Withdrawal of All General Partners. . . . . . . . . . . 45
8.4 Interest of General Partner After Removal
or Withdrawal. . . . . . . . . . . . . . . . . . . . . 45
8.5 Additional General Partners . . . . . . . . . . . . . . 45

SECTION 9. BOOKS AND RECORDS, ACCOUNTING, TAX ELECTIONS, ETC. . . . . . . 45
9.1 Books and Records . . . . . . . . . . . . . . . . . . . 45
9.2 Bank Accounts . . . . . . . . . . . . . . . . . . . . . 55
9.3 Fiscal and Tax Year . . . . . . . . . . . . . . . . . . 46
9.4 Accrual Basis . . . . . . . . . . . . . . . . . . . . . 46
9.5 Accountants; Filing of Returns. . . . . . . . . . . . . 46
9.6 Federal Income Tax Elections. . . . . . . . . . . . . . 46
9.7 Special Basis Adjustments . . . . . . . . . . . . . . . 46
9.8 Information to Partners . . . . . . . . . . . . . . . . 46

SECTION 10. POWER OF ATTORNEY. . . . . . . . . . . . . . . . . . . . . . . 47
10.1 Power of Attorney . . . . . . . . . . . . . . . . . . . 47
10.2 Duration of Power of Attorney . . . . . . . . . . . . . 48

SECTION 11. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 48
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . 48
11.2 Amendments. . . . . . . . . . . . . . . . . . . . . . . 49

Page 3 of 55
<PAGE>

11.3 Time of Admission . . . . . . . . . . . . . . . . . . . 49
11.4 Entire Agreement. . . . . . . . . . . . . . . . . . . . 49
11.5 Headings. . . . . . . . . . . . . . . . . . . . . . . . 49
11.6 Separability Provision. . . . . . . . . . . . . . . . . 49
11.7 Pronouns and Plurals. . . . . . . . . . . . . . . . . . 49
11.8 Binding Agreement . . . . . . . . . . . . . . . . . . . 49
11.9 Counterparts; Execution . . . . . . . . . . . . . . . . 50
11.10 Governing Law . . . . . . . . . . . . . . . . . . . . . 50
11.11 Delivery of Certificate
and Amendments . . . . . . . . . . . . . . . . . . . . 50
11.12 Confidentiality . . . . . . . . . . . . . . . . . . . . 50

Schedule A - Names, Addresses and Capital Contributions . . . . . . . . . 53

Exhibit A - Initial Projections. . . . . . . . . . . . . . . . . . . . . .

Exhibit B - Legal Descriptions of Property Sites . . . . . . . . . . . . .

Exhibit C - Title Insurance Requirements . . . . . . . . . . . . . . . . . 54

Page 4 of 55

<PAGE>

AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
AMERICAN MUTUAL AFFORDABLE HOUSING PARTNERS, L.P.

THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP ("Agreement") is
dated as of September 1, 1995 by and among GrA Partners Joint Venture, a
Delaware general partnership (the "General Partner"), AmerUs Properties, Inc.,
an Iowa corporation (the "Original Limited Partner") and the Persons listed on
Schedule A hereto (the "Investor Limited Partners").

Preliminary Statement

American Mutual Affordable Housing Partners, L.P. (the "Partnership") was
formed as a Delaware limited partnership pursuant to an Agreement of Limited
Partnership dated as of July 1, 1995 (the "Original Agreement"), by and between
the General Partner, as general partner, and the Original Limited Partner, as
limited partner. A Certificate of Limited Partnership with respect to the
Partnership dated as of July 27, 1995 (the "Original Certificate") was filed in
the Filing Office on July 31, 1995. Defined terms used herein shall have the
respective meanings given them in Section 2.1, in the Section cross-referenced
opposite such term in Section 2.2 or in the Subscription Agreements.

NOW, THEREFORE, in consideration of the mutual agreements set forth herein,
the parties hereby agree that the Original Agreement is hereby amended and
restated in its entirety, as follows:

SECTION 1. NAME AND BUSINESS

1.1 NAME; CONTINUATION. The business of the Partnership shall be
conducted under the name "American Mutual Affordable Housing Partners, L.P."
The Partners hereby agree to continue the Partnership as a limited partnership
pursuant to the provisions of the Uniform Act and upon the terms and conditions
set forth in this Agreement. This Agreement completely restates, amends and
supercedes the Original Agreement.

1.2 OFFICES AND REGISTERED AGENT.

(a) The registered office of the Partnership in the State is Corporation
Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.
The principal office of the Partnership is Suite 200W, 6000 Westown Parkway,
West Des Moines, Iowa 50266-7711. The General Partner may at any time change
the registered or principal office of the Partnership and shall promptly give
notice thereof to the Limited Partners.

(b) The name and address of the initial registered agent for service of
process of the Partnership to be designated on the Certificate is The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801. The registered agent for service
of process of the Partnership may be changed from time to time by the General
Partner in its sole and absolute discretion, subject to applicable law.

Page 5 of 55

<PAGE>

1.3 NAMES AND ADDRESSES OF PARTNERS. The names and business addresses of
the General Partner and the Investor Limited Partners are set forth on
Schedule A.

1.4 PURPOSE. The purpose of the Partnership is (i) to acquire the
Intermediate Partnership Interests in and become a limited partner of the
Intermediate Partnerships, which, in turn, are partners of the Operating
Partnerships, each of which Operating Partnerships owns and operates a Property
which has qualified for Tax Credits, and (ii) to hold, sell, dispose of and
otherwise deal with the Intermediate Partnership Interests. The business of the
Partnership shall include participation in such activities as are related or
incidental to the above. The Partnership shall not engage in any other business
or activity. The General Partner shall hold each of the Investor Limited
Partners (and their Affiliates, partners, shareholders, directors, officers,
employees, attorneys, agents, consultants or successors) (collectively with the
Investor Limited Partners, the "Indemnitees") harmless from and against any
loss, damage or liability (including any reasonable fees and expenses of
counsel) that they (or any of them) may incur in connection with any claim
arising as a result of business done or actions taken by the Partnership in
contravention of the provisions of this Section 1.4.

1.5 TERM AND DISSOLUTION. The Partnership shall continue in full force
and effect until December 31, 2055, except that the Partnership shall be
dissolved and its assets liquidated prior to such date upon: (i) the sale or
other disposition of all or substantially all of the assets of the Partnership;
(ii) the occurrence of any event as a result of which no General Partner remains
unless the Partnership is continued pursuant to Section 8.3; (iii) the election
to dissolve the Partnership made in writing by the General Partner with the
Consent of the Limited Partners (which Consent may be withheld in their sole
discretion); (iv) the dissolution and liquidation of all the Intermediate
Partnerships; (v) the occurrence of any event requiring such dissolution and
liquidation pursuant to the Uniform Act; or (vi) the entry of a final decree of
dissolution of the Partnership by a court of competent jurisdiction.

Upon dissolution of the Partnership (unless the business of the Partnership
is continued pursuant to Section 8.3), the General Partner (or, for purposes of
this paragraph, its trustees, receivers or successors) shall cause the
cancellation of the Certificate, liquidate the Partnership's assets and apply
and distribute the proceeds thereof in accordance with Section 4.3.
Notwithstanding the foregoing, if during the liquidation the General Partner
shall determine that an immediate sale of all of the Partnership's assets would
be impermissible, impractical or would cause undue loss to the Partners, the
General Partner may in its sole and absolute discretion defer (for up to two
years after such dissolution) liquidation of any assets of the Partnership,
except those necessary to satisfy the debts and obligations of the Partnership.
Proceeds of such liquidation shall be distributed with reasonable promptness
pursuant to the provisions of Article IV hereof.

SECTION 2. DEFINED TERMS

2.1 DEFINITIONS. For purposes of this Agreement the following terms shall
have the meanings specified below (see Section 2.2 for certain terms defined
elsewhere in this Agreement) or in the Subscription Agreements:

Page 6 of 55

<PAGE>

"Accountants" means Reznick, Fedder & Silverman of Baltimore, Maryland, or
such other firm of independent certified public accountants as may be engaged by
the General Partner with the Consent of the Limited Partners.

"Affiliate" means as to any named Person (or as to every Partner if no
Person is specifically named): (i) such Person or any member of his Immediate
Family; (ii) the legal representative, successor or assignee of, or any trustee
of a trust for the benefit of, any such Person or member of his Immediate
Family; (iii) any Entity of which a majority of the voting interests is owned by
any one or more of the Persons referred to in the preceding clauses (i) and
(ii); (iv) any officer, director, trustee, employee, stockholder (10% or more)
or partner (or any Person serving in a similar capacity to any of the foregoing)
of any Person referred to in the preceding clauses (i), (ii) and (iii); and (v)
any Person directly or indirectly controlling, controlled by or under direct or
indirect common control with, any Person referred to in any of the preceding
clauses; provided that Orion, Polar and the Affiliates of each of them shall not
be deemed Affiliates of the Partnership or any of its Affiliates.

"Agreement" means this Amended and Restated Agreement of Limited
Partnership (including all exhibits hereto), as amended from time to time.

"AMLIC" shall mean American Mutual Life Insurance Company.

"Capital Contribution" means the total value of cash contributed and agreed
to be contributed to the Partnership by each Partner, as shown in Schedule A or
as may be required under Section 6.1(b). Any reference in this Agreement to the
Capital Contribution of a then Partner shall include a Capital Contribution
previously made by any prior Partner for the Interest of such then Partner.

"Capital Transaction" means the sale or other disposition by the
Partnership of all or part of any Intermediate Partnership Interest, the sale or
other disposition by an Intermediate Partnership of all or part of any Operating
Partnership Interest, the sale or other disposition by an Operating Partnership
of all or substantially all of its assets, the refinancing of any Mortgage or
any other transaction affecting the Partnership, any Intermediate Partnership or
any Operating Partnership which is not in the ordinary course of its business,
except that the term "Capital Transaction" shall not include a
Repurchase/Adjustor Event as set forth in Section 3.3(b).

"Cash Available For Distribution" means (a) the sum of Cash Flow plus any
amounts withdrawn from Reserves which the General Partner determines are not
necessary for operations (but excluding amounts withdrawn from the Capital
Reserve pursuant to Section 5.10(c)), minus (b) the sum of payment of Incentive
Management Fees and payments to Reserves (other than payments to the Capital
Reserve).

"Cash Flow" means with respect to any period (a) all cash receipts of the
Partnership from the Intermediate Partnerships (other than proceeds from a
Capital Transaction) or other miscellaneous sources (including, without
limitation, interest on Temporary Investments), minus (b) all amounts expended
to pay for the costs and expenses of the Partnership (except for (i) the costs
and expenses of the Partnership in connection with a Capital Transaction,
(ii) the payments referred to in Section 5.8 and (iii) payments to Reserves).

Page 7 of 55

<PAGE>

"Certificate" or "Certificate of Limited Partnership" means the Original
Certificate referred to in the Preliminary Statement as filed with the Filing
Office, as amended from time to time.

"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the Regulations issued thereunder. References herein to any Code
section shall include any successor provisions.

"Completion Date" means, with respect to any Property or any building
therein, the earliest date upon which such Property or building (a) may be
legally occupied by tenants under applicable local laws, rules or regulations,
as evidenced by issuance of temporary or permanent certificate(s) of occupancy
or comparable approvals if available under local law, (b) has had all roads
necessary for the full utilization thereof either completed or the necessary
rights of way therefor have been acquired by the appropriate Governmental
Authority and (c) is held out by the Operating Partnership for occupancy by
tenants.

"Compliance Period" means the "compliance period" defined in Section 42 of
the Code.

"Consent of the Limited Partners" means the written consent or approval of
Investor Limited Partners owning in the aggregate more than 50% (or equal to or
greater than some higher percentage, if a higher percentage is required under
this Agreement) of the Interests owned by all Investor Limited Partners as set
forth on Schedule A, including Investor Limited Partners which are Affiliates of
the General Partner but without taking into account any Interests held by
Defaulting Limited Partners (except as provided in Section 3.5). For this
purpose, consent or approval of a particular Investor Limited Partner with
respect to any matter shall be deemed to have been received if (a) written
consent or approval from such Investor Limited Partner has been received by the
Partnership or (b) written response from such Investor Limited Partner has not
been received by the Partnership within 30 days following the dispatch (by
nationally recognized overnight courier service or by certified mail, fee or
postage prepaid) by the General Partner and receipt by such Investor Limited
Partner of a written notice requesting such consent or approval which notice
shall state the circumstances as set forth in this paragraph under which failure
to respond will constitute receipt of consent, the time frame within which
response is required and the consequences of failure to respond.

"Deferrable Portion" means, with respect to any Property, a fraction the
numerator of which is the total Tax Credits projected in the Initial Projections
to be allocable to the Partnership ("Projected Credit") from the applicable
Intermediate Partnership with respect to the Operating Partnership which owns
such Property and the denominator of which is the Projected Credit from all
Intermediate Partnerships with respect to all Operating Partnerships; provided
that, for purposes of the Second Installment (referred to in Section 3.3(a)(2)),
in determining the Deferrable Portion with respect to any Property which has not
reached its Completion Date on or before January 15, 1996, if at least 75% of
the individual buildings comprising such Property have then reached their
Completion Date, the Deferrable Portion will be decreased with respect to such
Property by a fraction, the numerator of which is the Projected Credit from the
completed apartment units contained in such buildings and the denominator of
which is the total Projected Credit from such Property.

Page 8 of 55

<PAGE>

"Disposition" (including the forms "Dispose" and "Disposing") means as to
an Investor Limited Partner, the assignment, sale, conveyance, exchange or other
transfer of all or any part of its Interest.

"8609 Issuance" means, with respect to any Property, the receipt by the
Operating Partnership which owns such Property of Internal Revenue Service
Form(s) 8609 with respect to all buildings in such Property.

"Entity" means any general partnership, limited partnership, limited
liability company or partnership, corporation, joint venture, trust, business
trust, cooperative, or other association (and, with respect to provisions
relating to environmental matters, Governmental Authority).

"Event of Bankruptcy" means, with respect to any Person, (i) the entry of a
decree or order for relief by a court having jurisdiction in respect of such
Person in an involuntary case under the Federal bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal or state bankruptcy,
insolvency or other similar law, or the appointment of a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or similar official) of such Person
or for any substantial part of its property, or the issuance of an order for the
winding-up or liquidation of its affairs and the continuance of any such decree
or order unstayed and in effect for a period of 60 consecutive days, (ii) the
commencement by such Person of a voluntary case under the Federal bankruptcy
laws, as now or hereafter constituted, or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or the consent by such person to
the appointment of, or the taking of possession by, a receiver, liquidator,
assignee, trustee, custodian, or sequestrator (or similar official) of such
Person or of any substantial part of such Person's property, or the making by
such Person of any assignment for the benefit of creditors or, the consent by
such Person to any such decree, order or appointment, or the taking of any
action by such Person in furtherance of any of the foregoing. To the extent
permitted by law, the term "Event of Bankruptcy" as used in this Agreement shall
supersede and replace the events of withdrawal described in Sections 17-
402(a)(4) and (5) of the Uniform Act.

"Filing Office" means the Office of the Secretary of State of the State of
Delaware.

"General Partner" means GrA Partners Joint Venture and shall include any
Person who becomes a General Partner as provided herein, in such Person's
capacity as a General Partner of the Partnership.

"Immediate Family" means, with respect to any Person, his spouse, parents,
parents-in-law, descendants, nephews, nieces, brothers, sisters,
brothers-in-law, sisters-in-law, children-in-law and grandchildren-in-law.

"Initial Funding Date" shall mean September 7, 1995.

"Initial Projections" means the financial projections and accompanying
notes thereto prepared by Reznick Fedder & Silverman and attached hereto as
Exhibit A, which set forth on page 6 of such financial projections with respect
to the Partnership an after-tax internal rate of return (the "Internal Rate of
Return") of 12.26%.

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<PAGE>

"Installment" means an installment of the Capital Contribution payable by
the Investor Limited Partners.

"Interest" means the entire interest of a Partner in the Partnership at any
particular time, including the right of such Partner to any and all benefits to
which a Partner may be entitled under this Agreement and the obligations of such
Partner to comply with this Agreement.

"Intermediate General Partners" means, with respect to an Intermediate
Partnership, the general partner(s) or other Person entitled to exercise
management rights under its Intermediate Partnership Agreement.

"Intermediate Partnerships" means CPI Housing Partners I, L.P., 60th &
Vista, L.P. and 65th & Vista, L.P., each an Iowa limited partnership and each of
which owns an Operating Partnership Interest in an Operating Partnership.

"Intermediate Partnership Agreement" means the limited partnership
agreement of an Intermediate Partnership and/or the subscription, purchase or
other agreement, if any, relating to the acquisition by the Partnership of an
Intermediate Partnership Interest, as each may be amended from time to time.

"Intermediate Partnership Installment" means an installment of capital
contribution payable by the Partnership to a particular Intermediate
Partnership.

"Intermediate Partnership Interest" means the entire interest of the
Partnership in an Intermediate Partnership, including the right of the
Partnership to any and all benefits to which the Partnership may be entitled as
provided in an Intermediate Partnership Agreement and the obligation of the
Partnership to comply with the terms of such Intermediate Partnership Agreement.

"Intermediate Partnership Non-Recourse Liability" means any liability (or
portion thereof) of an Intermediate Partnership for which no partner of such
Intermediate Partnership or Related Person thereof bears the economic risk of
loss as defined in Treasury Regulation Section 1.752-2.

"Investor Limited Partners" means those Persons listed in Schedule A as
Investor Limited Partners, including Substituted Investor Limited Partners, in
their capacity as such.

"Lender" means any holder of any Mortgage.

"Low-Income Housing Tax Credit" means the low-income housing tax credits
allowed for low-income housing under Section 42 of the Code (or any successor
provisions thereof).

"Mortgage" means, with respect to a particular Operating Partnership, the
mortgage indebtedness of such Operating Partnership to its Lender; where the
context admits, "Mortgage" shall mean and include the promissory note evidencing
said indebtedness, the mortgage deed or deed of trust and security agreement
securing such indebtedness and all other documentation relating thereto.

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<PAGE>

"Operating General Partners" means, with respect to an Operating
Partnership, the general partner(s) or other Person entitled to exercise
management rights under its Operating Partnership Agreement.

"Operating Partnerships" means Commander Place Housing, Ltd. (a Florida
limited partnership), 65th Street Partnership (a general partnership governed by
Iowa law) and 60th Street Partnership (a general partnership governed by Iowa
law).

"Operating Partnership Agreement" means the partnership agreement or other
organization documents of an Operating Partnership and/or the purchase or other
agreement, if any, relating to the acquisition by an Intermediate Partnership of
an Operating Partnership Interest, as each may be amended from time to time.

"Operating Partnership Installment" means an installment of capital
contribution payable by an Intermediate Partnership to a particular Operating
Partnership.

"Operating Partnership Interest" means the entire interest of an
Intermediate Partnership in an Operating Partnership, including the right of
such Intermediate Partnership to any and all benefits to which such Intermediate
Partnership may be entitled as provided in an Operating Partnership Agreement
and the obligation of such Intermediate Partnership to comply with the terms of
such Operating Partnership Agreement.

"Operating Partnership Non-Recourse Liability" means any liability (or
portion thereof) of an Operating Partnership for which no partner of such
Operating Partnership or Related Person thereof bears the economic risk of loss
as defined in Treasury Regulation Section 1.752-2.

"Operative Documents" means this Agreement, the Subscription Agreements,
the Intermediate and Operating Partnership Agreements, a certain Lease
Performance Agreement of even date herewith between AmerUs Properties, Inc. and
the Operating Partnerships which own the Properties located in Iowa, and all
other material documents, instruments and agreements binding on or otherwise
materially related to the Partnership or any Intermediate or Operating
Partnership.

"Orion" shall mean NCC Orion Company, a Delaware corporation.

"Partner" means any General Partner or Investor Limited Partner.

"Partner Non-Recourse Debt" means any Partnership Liability (1) that is
considered non-recourse under Regulation Section 1.1001-2 and (2) for which any
Partner or Related Person bears the economic risk of loss under Treasury
Regulatory Section 1.752-2.

"Partner Non-Recourse Debt Minimum Gain" means the amount of partner
non-recourse debt minimum gain determined in a manner consistent with Treasury
Regulation Sections 1.704-2(d), 1.704- 2(k) and 1.704-2(g)(3).

"Partnership" means the limited partnership continued pursuant to this
Agreement.

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<PAGE>

"Partnership Liability" means a liability of the Partnership or the
Partnership's share of a liability of an Intermediate Partnership or the
Partnership's share of an Intermediate Partnership's share of a liability of an
Operating Partnership.

"Partnership Minimum Gain" means the amount determined by computing, with
respect to each Partnership Non-Recourse Liability, the Partnership's share of
any Intermediate Partnership Non-Recourse Liability or the Partnership's share
of an Intermediate Partnership's share of an Operating Partnership Non-Recourse
Liability, the amount of gain, if any, that would be realized by the Partnership
if it, an Intermediate Partnership or an Operating Partnership disposed of (in a
taxable transaction) the property subject to such liability in full satisfaction
of such liability, and by then aggregating the amounts so computed. Such
computations shall be made in a manner consistent with Treasury Regulation
Section 1.704-2(d) under Section 704 of the Code.

"Partnership Non-Recourse Liability" means any Partnership Liability (or
portion thereof) for which no Partner or Related Person bears the economic risk
of loss as defined in Treasury Regulation Section 1.752-2.

"Partnership Register" means the schedule (which shall form a part of the
books and records of the Partnership) listing the names and addresses of all
Limited Partners, together with the amounts of their respective Capital
Contributions, the Interest held by them and all security interests and pledges
applicable to the Interest of any Limited Partners, which schedule shall be
maintained by the General Partner in accordance with this Agreement.

"Permanent Mortgage Closing" means, with respect to any Property, the date
on which a Standby Permanent Mortgage (or another non-recourse (except that
there may be recourse for fraud, misapplication of funds, material
misrepresentation and environmental liability and there may be Partner
Non-Recourse Debt) and non cross-collateralized permanent Mortgage maturing in
no less than 15 years and on other terms (a) not materially less favorable to
the Operating Partnership in question and in any event not less favorable with
respect to principal amount, term and amortization period than either the terms
assumed in the Initial Projections or the terms of the Standby Permanent
Mortgage or (b) which have received the Consent of the Limited Partners) shall
have closed and the proceeds thereof shall have been disbursed by the lender.
Furthermore, Permanent Mortgage Closing with respect to a Property shall not be
deemed to have occurred until a Title Policy (as hereafter defined) and a
current, original as-built survey of such Property (prepared in accordance with
American Land Title Association standards by a surveying firm licensed in the
state where the Property is located and certified to the Operating Partnership
which owns such Property and the Title Insurance Company (as hereafter defined)
showing no legally objectionable matters (e.g. encroachments, violation of set
back lines, violation of easements, etc.) relating to the development of the
improvements shown thereon) shall have been delivered. As used herein, the term
"Title Policies" means the owner's policy of title insurance (or an equivalent
"marked up" commitment therefore provided that the premium therefor has been
paid and such insurance is immediately effective) issued to each of the
Operating Partnerships by First American Title Insurance Company (the "Title
Insurance Company"), which policy shall (i) insure such Operating Partnership's
fee simple interest in its Property subject only to those exceptions (a) which
are consented to by the Investor Limited Partners (which consent shall not be
unreasonably withheld), (b) which are contained in the title insurance policy
no. J447361 (effective date of May 18, 1995 ) issued by the Title Insurance
Company with respect to the Property owned by 65th Street Partnership, title
insurance policy no. J447360 (effective date of May 16,

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<PAGE>

1995) issued by the Title Insurance Company with respect to the Property owned
by 60th Street Partnership and title insurance commitment no. 94.07832
(including endorsements 1, 2 and 3 and an effective date of July 17, 1995)
issued by the Title Insurance Company with respect to the Property owned by
Commander Place Housing, Ltd., (c) which refer to instruments evidencing the
permanent Mortgage meeting the requirements of the first sentence of this
paragraph or (d) which are reasonably necessary for the completion or operation
of the Property in accordance with applicable Operative Documents and which do
not materially adversely affect the value or use of the Property; (ii) be
down-dated or re-issued effective as of a date after the Initial Funding Date;
(iii) be acceptable to the General Partner; (iv) be in the amount of not less
than the sum of all Mortgage loans and the aggregate capital contributions of
the partners with regard to the Property insured and (v) otherwise meeting the
requirements for title insurance under EXHIBIT C attached hereto not
inconsistent with the explicit provisions of this definition.

"Person" means any individual or Entity.

"Polar" shall mean NCC Polar Company, a Delaware corporation.

"Properties" means the land and improvements comprising the housing
developments located on sites owned by the Operating Partnerships and more
particularly described on Exhibit B attached to this Agreement.

"Qualified Income Offset Item" means (1) an allocation of loss or deduction
that, as of the end of each year, reasonably is expected to be made (a) pursuant
to Section 704(e)(2) of the Code to a donee of an interest in the Partnership,
(b) pursuant to Section 706(d) of the Code as the result of a change in any
Partner's Interest, or (c) pursuant to Regulation Section 1.751-1(b)(2)(ii) as
the result of a distribution by the Partnership of unrealized receivables or
inventory items and (2) a distribution that, as of the end of such year,
reasonably is expected to be made to a Partner to the extent it exceeds
offsetting increases to such Partner's Capital Account which reasonably are
expected to occur during or prior to the Partnership taxable year in which such
distribution reasonably is expected to occur.

"Related Person" means a Person related to a partner within the meaning of
Treasury Regulation Section 1.752-4(b).

"Reserves" means the Capital Reserve, the Operating Reserve and any other
funds set aside, or amounts allocated in the reasonable discretion of the
General Partner to reserves, for working capital, capital expenditure programs,
and to pay taxes, insurance, debt service or other costs, liabilities or
expenses incident to the operation of the Partnership.

"Schedule A" means the Schedule A attached hereto and hereby made a part
hereof.

"State" means the State of Delaware.

"Subscription Agreement" means the subscription agreement executed by the
General Partner and by each Investor Limited Partner in form and substance
satisfactory to the General Partner setting forth the commitment of such
Investor Limited Partner to acquire its Interest.

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<PAGE>

"Substituted Investor Limited Partner" means any Person who is admitted to
the Partnership as a successor Investor Limited Partner pursuant to Section 7.2.

"Tax Counsel" means Peabody & Brown, of Boston, Massachusetts, or another
law firm selected by the General Partner with the reasonable Consent of the
Limited Partners.

"Tax Credits" means with respect to all Properties, the Low-Income Housing
Tax Credits.

"Temporary Investments" means dollar denominated investments limited to (a)
United States government securities, (b) securities issued or fully guaranteed
by United States government agencies, (c) certificates of deposit and time or
demand deposits in, or repurchase agreements constituting obligations of,
commercial banks with deposits insured by the Federal Deposit Insurance
Corporation and having a combined capital and surplus of not less than
$100,000,000, (d) commercial paper of corporations doing business in, and
incorporated under the laws of, the United States of America or any State
thereof which are rated P-1 by Moody's Investors Services, Inc. ("Moody's"), or
(e) such other investments as are permitted by Consent of the Limited Partners.

"Uniform Act" means the Delaware Revised Uniform Limited Partnership Act,
as amended from time to time, or any successor statute.

"Withdrawal" (including the forms "Withdraw", "Withdrawing" and
"Withdrawn") means, as to a General Partner, the occurrence of death,
adjudication of insanity or incompetence, Event of Bankruptcy, dissolution,
liquidation, or voluntary or involuntary withdrawal or retirement from the
Partnership for any reason, including whenever a General Partner may no longer
continue as a General Partner by law or pursuant to any terms of this Agreement;
provided, however, that dissolution of GrA Partners Joint Venture by reason of
the withdrawal of a partner or joint venturer thereof shall not be deemed a
Withdrawal of the General Partner if each such partner or joint venturer of GrA
Partners Joint Venture shall be admitted as a General Partner hereunder prior to
the date of such dissolution (which admission each Partner hereof consents to by
the execution of this Agreement), the joint venture partners thereof assume the
duties of the General Partner hereunder and exercise their General Partner
authority in the same manner as provided in the joint venture agreement pursuant
to which the General Partner is constituted on the date hereof and each such
joint venture partner remains liable on a recourse basis hereunder.

2.2 CROSS REFERENCES. For purposes of this Agreement, the following terms
defined elsewhere in this Agreement or in the Subscription Agreements shall have
the respective meanings therein assigned:

TERM DEFINITION
------ ------------

Asset Management Fee Section 5.8(d)
Attorney Section 10.1
Book Value Section 4.4(k)
Bridge Loan Section 5.13
Capital Account Section 3.6
Capital Reserve Section 5.10
Contaminant Subscription Agreements

Page 14 of 55

<PAGE>

Defaulting Limited Partner Section 3.5
Disposition Fee Section 5.8(f)
Environmental Damages Subscription Agreements
Environmental Laws Subscription Agreements
Environmental Lien Subscription Agreements
Final Projections Section 3.3(a)(4)
Good Cause Notice Section 3.5
Governmental Authority Subscription Agreements
Indemnitees Section 1.4
Internal Rate of Return Section 2.1, "Initial
Projections" definition
Losses Section 4.1(h)
Minimum Required Debt Service Section 5.9(b)
Net Operating Income Section 5.9(b)
Operating Reserve Section 5.10
Original Agreement Preliminary Statement
Original Certificate Preliminary Statement
Original Limited Partner Preamble
Organization Fee Section 5.8(b)
Partnership Preliminary Statement
Power of Attorney Section 10.2
Profits Section 4.1(h)
Projected Credit Section 2.1, "Deferrable
Portion" definition
Refinancing Fee Section 5.8(e)
Release Subscription Agreements
Repurchase/Adjustor Event Section 3.3(b)
Repurchase/Adjustor Funds Section 3.3(b)
Standby Permanent Mortgage Section 5.9(b)
Title Insurance Company Section 2.1, "Permanent
Mortgage Closing"
definition
Title Policy Section 2.1, "Permanent
Mortgage Closing"
definition

SECTION 3. CAPITAL CONTRIBUTIONS AND ADMISSION OF LIMITED PARTNERS

3.1 CONTRIBUTION OF GENERAL PARTNER. The General Partner has made a
Capital Contribution of cash in the amount set forth opposite its name in
Schedule A and is obligated to make a further Capital Contribution under the
circumstances set forth in Section 5.8(d) and 4.3(a).

3.2 WITHDRAWAL OF ORIGINAL LIMITED PARTNER; ADMISSION OF INVESTOR LIMITED
PARTNERS.

(a) Immediately following the admission effected by Section 3.2(b), the
Original Limited Partner hereby withdraws as the Original Limited Partner, and
acknowledges that, in its capacity

Page 15 of 55

<PAGE>

as Original Limited Partner, it has received a return of its Capital
Contribution from and no longer has any interest in, or rights or claims
against, the Partnership.

(b) Each of the Persons listed on Schedule A as Investor Limited Partners
is hereby admitted to the Partnership as an Investor Limited Partner. The names
and the business or mailing addresses of the Investor Limited Partners, their
Capital Contributions and the Interests held by them, expressed as a percentage
of the Interests held by all Investor Limited Partners, shall be set forth in
the Partnership Register.

3.3 CONTRIBUTION OF INVESTOR LIMITED PARTNERS.

(a) Each Investor Limited Partner hereby agrees to make a Capital
Contribution to the Partnership in the amount set forth in Schedule A, which
amount shall be payable at the times and in the amounts (the "Installments") set
forth below:

(1) an initial Installment in an amount equal to 11.5% of the Capital
Contribution of each Investor Limited Partner shall be payable to the
Partnership upon the admission to the Partnership of such Investor Limited
Partner;

(2) a second Installment in an amount equal to 36.0% of the Capital
Contribution of each Investor Limited Partner (the "Second Installment")
shall be payable to the Partnership on the later of (A) January 15, 1996 or
(B) occurrence of the Completion Date with respect to each Property;
provided, however, that in the event that the Completion Date for one or
more of the Properties shall not have occurred by January 15, 1996 then
payment of the Deferrable Portion of the Second Installment with respect to
each such Property shall be postponed and shall then be paid in one payment
at a time determined by the General Partner reflecting the then applicable
decrease in the Deferrable Portion;

(3) a third Installment in an amount equal to 42.5% of the Capital
Contribution of each Investor Limited Partner (the "Third Installment")
shall be payable to the Partnership on the later of (A) October 15, 1996 or
(B) occurrence of Permanent Mortgage Closing and 8609 Issuance with respect
to each Property; provided, however, that in the event that Permanent
Mortgage Closing and 8609 Issuance for one or more of the Properties shall
not have occurred by October 15, 1996 then payment of the Deferrable
Portion of the Third Installment with respect to each such Property shall
be postponed until the occurrence of Permanent Mortgage Closing and 8609
Issuance with respect to such Property; and

(4) a fourth Installment in an amount equal to 10% of the Capital
Contribution of each Investor Limited Partner (the "Fourth Installment")
shall be payable to the Partnership on February 15, 1997; provided,
however, that at least 30 but no more than 45 days prior to February 15,
1997 the Accountants shall (a) recompute the Initial Projections using the
same methodology, assumptions and presentation but taking into account any
actual results or facts then known (including any results or facts which
constitute a Repurchase/Adjustor Event which has occurred prior to such
recomputation but excluding the effect of any change in Federal tax law, it
being agreed that such recomputation and such actual results and facts
shall not include any new categories of fees, or additional types of
categories of payments in lieu of those assumed or estimated in the Initial
Projections, and (b) include with such recomputation their certification
that such recomputation complies with the requirements of this sentence (as

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<PAGE>

so recomputed and certified to, the "Final Projections"). If an Investor
Limited Partner does not agree with the Final Projections, within 7
business days after receipt by such Investor Limited Partner of such Final
Projections, such Investor Limited Partner shall notify the General Partner
in writing of such disagreement and set forth in such writing in reasonable
detail its grounds for such disagreement. If the Final Projections
determine that the Internal Rate of Return is less than 12.26% per annum,
then (a) up to $1,772,800 of the Fourth Installment shall be deferred into
one or more later payments, reduced or both deferred and reduced in whole or
in part (all as determined by the General Partner in its sole and absolute
discretion) and the Investor Limited Partners shall receive a distribution
of any Repurchase/Adjustor Funds arising from a Repurchase/ Adjustor Event
occurring prior to the due date of the Fourth Installment such that, when
the Final Projections are recomputed by the Accountants in accordance with
such deferred and/or reduced payments and Repurchase/Adjustor Funds
distribution, the Internal Rate of Return shall be increased to 12.26% (or
as near thereto as the maximum reduction and deferral of said $1,772,800
payment and distribution to Investor Limited Partners of any
Repurchase/Adjustor Funds distribution can achieve), and (b) the balance of
the Fourth Installment shall be payable in full on February 15, 1997.

The General Partner shall give each Investor Limited Partner not less than ten
(10) business days' written notice prior to the due date of each Installment
subsequent to the initial Installment. The Investor Partners shall pay any
Deferrable Portion of any Installment upon ten (10) business days' written
notice from the General Partner stating that the conditions thereto have been
met and setting forth the amount and due date thereof.

(b) The General Partner is hereby authorized, without the consent of any
other Partner, to direct an Intermediate Partnership to require the Operating
General Partners to repurchase an Operating Partnership Interest or to reduce or
receive a return of the Operating Partnership Installments or to receive any
other payment or distribution from an Operating Partnership (including any
increased cash distribution by an Operating Partnership to an Intermediate
Partnership resulting from a decrease in a cash payment or distribution by such
Operating Partnership to any party other than such Intermediate Partnership)
which arises as a result of a reduction in anticipated Tax Credits or Losses
("Repurchase/Adjustor Funds") upon the occurrence of any event set forth in the
related Operating Partnership Agreement giving rise to such repurchase
obligation or such reduction, payment or distribution (a "Repurchase/Adjustor
Event"). The General Partner shall direct an Intermediate Partnership to
distribute to the Partnership the capital which would otherwise have been
invested in such Operating Partnership and any Repurchase/Adjustor Funds from
the applicable Operating Partnership and any funds then being held by the
Partnership for the purpose of making payments of future Intermediate
Partnership Installments with respect to the applicable Intermediate Partnership
which are no longer required as the result of the Repurchase/Adjustor Event,
whereupon such funds shall be applied as follows: First, 100% to Investor
Limited Partners to the extent required for each to achieve the Internal Rate of
Return of 12.26% under a new set of Projections to be provided by the
Accountants (prepared in the same manner as the Final Projections) and
thereafter such funds shall be deemed to be cash available from a Capital
Transaction and shall be distributed pursuant to Section 4.2(b). The General
Partner may, subject to its fiduciary duty to the Partnership and the Investor
Limited Partners but otherwise in its sole and absolute discretion, direct an
Intermediate Partnership to exercise any rights under any Repurchase/Adjuster
Event provision of

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<PAGE>

any Operating Partnership Agreement, to waive any such rights or to extend the
time for compliance therewith.

3.4 NO PLEDGE OR ASSIGNMENT OF PROCEEDS BY GENERAL PARTNER. The General
Partner shall not pledge or assign the proceeds of the Installments.

3.5 DEFAULTS. In the event any Investor Limited Partner fails to make any
payment of its Capital Contribution when due, unless prior to such due date one
or more Investor Limited Partners shall in good faith have given written notice
(a "Good Cause Notice") to the General Partner of an event constituting "good
cause" as defined in Section 3.8, it shall be in default hereunder (a
"Defaulting Limited Partner"). In such event, interest shall be payable on the
amount due at a rate equal to 1.5% per month (or, if less, the maximum rate
permitted by law) and such interest shall accrue from the day immediately
following the due date until payment of such due amount is made in full. If a
Good Cause Notice has been given as aforesaid but after such due date it is
determined that the Investor Limited Partner did not have the right to remove
the General Partner pursuant to Section 3.8, the Investor Limited Partner shall
be deemed to have been in default since such due date, but shall have the right
to cure such default by paying, within 10 business days following such
determination, the full amount of the unpaid Capital Contribution plus all
interest accrued thereon pursuant to the immediately preceding sentence. If
either (a) no Good Cause Notice was given or (b) the Good Cause Notice was given
and the aforesaid determination of no removal right is made but the Investor
Limited Partner has not cured such default within such 10 business day period,
then after 15 days written notice by the General Partner to the Defaulting
Limited Partner, the General Partner may in its sole and absolute discretion
(i) pursue any and all available legal remedies against the Defaulting Limited
Partner, including those under this Agreement, the Subscription Agreement or any
other agreement executed or furnished by such Defaulting Limited Partner, or
(ii) without being under any obligation to do so, negotiate a settlement with
the Defaulting Limited Partner providing for extensions of time of payment.
Further, the Defaulting Limited Partner shall also be subject to Section 4.4(f)
and the Partnership shall be entitled to collect all costs of collection
including, but not limited to, reasonable attorneys' fees.

Unless and until such default shall be cured, any distributions in respect
of the Interest of the Defaulting Limited Partner shall be applied first to
costs of collection, second to interest on the defaulted amount and third to the
defaulted amount; the profits, losses and Tax Credits in respect thereof shall
be allocated to the General Partner; and the Defaulting Limited Partner shall
have no right to vote the defaulted Interest.

Each Investor Limited Partner hereby irrevocably consents and agrees that
any action or proceeding against such Investor Limited Partner for the purpose
of enforcement of this Agreement may be instituted in the Federal courts or the
state courts of general jurisdiction sitting in the State of New York, and
hereby irrevocably waives any objection which such Investor Limited Partner may
have or hereafter may have to the venue of any such action or proceeding, and
irrevocably submits to the jurisdiction of such court in any action or
proceeding. Each Investor Limited Partner further agrees that final judgment
against such Investor Limited Partner in any such legal action or proceeding
shall be conclusive and may be enforced in any other jurisdiction within or
outside the United States of America, by suit on such judgment, a certified copy
of which shall be conclusive evidence of the existence and amount of the
obligations of such Investor Limited Partner thereunder.

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3.6 CAPITAL ACCOUNTS. An individual capital account shall be established
and maintained by the Partnership on behalf of each Partner, including any
additional or substituted Partner who shall hereafter receive an Interest (any
such account, a "Capital Account"). In accordance with Treasury Regulation
Section 1.704-1(b), the Capital Account of each Partner shall consist of
(a) the amount of the paid-in Capital Contribution of such Partner and
Partnership liabilities that are assumed by such Partner that are secured by any
Partnership property distributed to such Partner plus (b) the amount of profits
or income (including tax-exempt income) allocated to such Partner pursuant to
Section 4 less (c) the amount of losses and deductions allocated to such Partner
less (d) the amount of cash distributed to such Partner less (e) the fair market
value of any property distributed to such Partner net of any liabilities assumed
by such Partner or to which such property is subject less (f) such Partner's
share of any other expenditures which are not deductible by the Partnership for
Federal income tax purposes or which are not allowable as additions to the basis
of Partnership property. Capital Accounts shall be adjusted as provided in
Section 4.4(k) and (l) and shall be subject to such other adjustments as may be
required under the Code.

The original Capital Account established for any substituted Partner shall
be in the same amount as, and shall replace, the Capital Account of the Partner
which such substituted Partner succeeds, and, for the purposes of this
Agreement, such substituted Partner shall be deemed to have made the Capital
Contribution, to the extent actually paid in, of the Partner which such
substituted Partner succeeds. The term "substituted Partner", as used in this
paragraph, shall mean a Person who shall become entitled to receive a share of
the profits, losses, Tax Credits and distributions of the Partnership by reason
of such Person succeeding to the Interest of a Partner by assignment of all or
any part of a Partner's Interest. To the extent a substituted Partner receives
less than 100% of the Interest of a Partner it succeeds, the original Capital
Account of such substituted Partner and its Capital Contribution shall be in
proportion to the Interest it receives and the Capital Account of the Partner
who retains a partial Interest and its Capital Contribution shall continue, and
not be replaced, in proportion to the Interest it retains. Nothing in this
Section 3.6 shall affect the limitations on transferability of Partnership
interests set forth in Section 7 or Section 8.

3.7 INTEREST; RETURN OF CAPITAL. No Partner shall be paid interest on its
Capital Contribution. No Partner shall have the right to withdraw its Capital
Contribution or to demand and receive property of the Partnership in return for
its Capital Contribution, except as may be specifically provided herein or
required by applicable law. Nothing in this Section 3.7 shall affect the rights
of the Investor Limited Partners under Section 3.10.

3.8 SPECIAL RIGHTS OF LIMITED PARTNERS.

(a) In addition to the other rights provided for in this Agreement, the
Investor Limited Partners, by Consent of the Limited Partners holding at least
60% of the Interests, shall have the right to remove a General Partner for good
cause and, upon such removal, to elect one or more new General Partners and
continue the business of the Partnership with such new General Partner or
Partners. For purposes of Section 3.5 and this Section 3.8(a), "good cause"
means the occurrence of (i) any material breach by a General Partner of this
Agreement or any other Operative Document, (ii) any material breach by a General
Partner of its fiduciary duties to the Partnership or the Partners, (iii) gross
negligence or willful misconduct by a General Partner in connection with
Partnership affairs or any of the Operative Documents, (iv) the making of any
representation by a General Partner in any Operative Document which (x) is
untrue, false or

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misleading in any material respect when made or when required to be true
pursuant to the terms hereof or thereof and (y) remains untrue, false or
misleading in any material respect when any action requiring "good cause" under
Section 3.5 or this Section 3.8(a) is attempted to be taken and which materially
adversely impairs (or is reasonably likely to so impair in the future) the
Investor Limited Partners' investment in the Partnership or (v) a Withdrawal by
such General Partner; provided, however, that "good cause" shall be deemed to
exist in the case of a breach, only if such breach is not cured within
30 business days after notice to such General Partner or cured within a
reasonable time not to exceed 120 days in the event it is impossible to cure
such breach within such 30-day period, so long as such General Partner is
diligently and in good faith seeking to cure such breach.

(b) The Interest of any General Partner removed pursuant to this
Section 3.8 shall be subject to transfer pursuant to Section 8.4. Any General
Partner so removed shall continue to be entitled to repayment (in accordance
with the provisions of this Agreement applicable thereto) of any loans made by
it to the Partnership and will not be liable for any obligations of the
Partnership arising from events occurring after the effective date of its
removal.

3.9 MEETINGS. The General Partner or Investor Limited Partners owning at
least 25% of the Interests owned by all Investor Limited Partners may call
meetings of the Partnership for any matters for which the Investor Limited
Partners may vote as set forth in this Agreement. The General Partner shall
give the other Partners written notice of the meeting so called which shall be
scheduled not less than 15 nor more than 60 days from the date of notice (and,
in the case of a meeting called upon request of the Investor Limited Partners,
shall be given within 15 days of the request). All meetings shall be held at
the principal office of the Partnership; provided that Partners may attend such
meeting by means of teleconferencing systems wherein each participant can hear
and be heard by each other participant.

3.10 REDEMPTION OF PARTNERSHIP INTERESTS. Each Investor Limited Partner
shall have the right, exercised by giving written notice to the Partnership
within 180 days following the end of the Compliance Period, to require the
Partnership to redeem the Interest in the Partnership of such Investor Limited
Partner for a redemption price of $100, whereupon such Investor Limited Partner
shall cease to be a Partner and shall have no further rights, duties or
obligations with respect to the Partnership or any of the other Partners.

SECTION 4. PROFITS AND LOSSES; DISTRIBUTIONS; CAPITAL ACCOUNTS

4.1 PROFITS, LOSSES AND TAX CREDITS.

(a) Except as otherwise specifically provided in this Section, for each
fiscal year or portion thereof, (i) all profits, tax-exempt income, losses, Tax
Credits and non-deductible, non-capitalizable expenditures incurred and/or
accrued by the Partnership, other than those arising from a Capital Transaction,
shall be allocated 99% to the Investor Limited Partners and 1% to the General
Partner.

(b) Except as otherwise specifically provided in this Section, all profits
and losses arising from a Capital Transaction shall be allocated to the Partners
as follows:

As to profits:

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First, an amount of profit equal to the aggregate negative balances
(if any) in the Capital Accounts of all Partners having negative Capital
Accounts shall be allocated to such Partners in proportion to their
negative Capital Account balances until all such Capital Accounts shall
have zero balances; and

Second, an amount of profits shall be allocated to each of the
Partners until the positive balance in the Capital Account of each Partner
equals the amount of cash which would be distributed to such Partner in
accordance with, first, subparagraph (4) and, second, subparagraph (5) of
Section 4.2(b) if all Partnership assets were sold for an amount equal to
their adjusted basis determined under Regulation Section 1.704-1(b)(2)(iv)
(g) and all Partnership cash were so distributed.

As to losses:

First, an amount of losses equal to the aggregate positive balances
(if any) in the Capital Accounts of all Partners having positive balance
Capital Accounts shall be allocated to such Partners in proportion to their
positive Capital Account balances until all such Capital Accounts shall
have a zero balance; provided, however, that if the amount of losses so to
be allocated is less than the sum of the positive balances in the Capital
Accounts of those Partners having positive balances in their Capital
Accounts, then such losses shall be allocated to the Partners in such
proportions and in such amounts so that the Capital Account balances of
each Partner shall equal, as nearly as possible, the amount such Partner
would receive if an amount equal to the excess of (a) the sum of all
Partners' balances in their Capital Accounts computed prior to the
allocation of losses under this clause First over (b) the aggregate amount
of losses to be allocated to the Partners pursuant to this clause First
were distributed to the Partners in accordance with the provisions of,
first, subparagraph (4) and, second, subparagraph (5) of Section 4.2(b);
and

Second, the balance, if any, of any such losses shall be allocated 99%
to the Investor Limited Partners and 1% to the General Partner.

(c) Notwithstanding the foregoing provisions of Sections 4.1(a) and
4.1(b), in no event shall any losses be allocated to an Investor Limited Partner
if and to the extent that such allocation would cause, as of the end of the
Partnership taxable year, the negative balance in such Investor Limited
Partner's Capital Account to exceed such Investor Limited Partner's share of
Partnership Minimum Gain plus such Investor Limited Partner's share of Partner
Non-Recourse Debt Minimum Gain. Any losses which are not allocated to the
Investor Limited Partners by virtue of the application of this Section 4.1(c)
shall be allocated to the General Partner. For purposes of this Section 4.1(c),
a Partner's Capital Account shall be treated as reduced by Qualified Income
Offset Items.

(d) If (i) the Partnership incurs recourse obligations or Partner
Non-Recourse Debt or (ii) the Partnership incurs losses from extraordinary
events which are not recovered from insurance or otherwise (collectively,
"Recourse Obligations") in respect of any Partnership taxable year, then the
calculation and allocation of profits and losses shall be adjusted as follows:
first, an amount of deductions attributable to the Recourse Obligations other
than cost recovery deductions shall be allocated to the Partner or Partners that
bear the economic risk of loss (within the meaning of

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Treasury Regulation Section 1.752-2 with respect to such obligations in the
ratio in which they bear the economic risk of loss (or to the General Partner in
the case of extraordinary events); and second, the balance of such deductions
shall be allocated as provided in Section 4.1(a).

(e) If there is a net decrease in Partnership Minimum Gain during a
Partnership taxable year, each Partner will be allocated items of income
(including gross income) and gain for such year (and, if necessary, subsequent
years) in the proportion to, and to the extent of, an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain during the year.
A Partner is not subject to this Partnership Minimum Gain chargeback to the
extent that any of the exceptions provided in Treasury Regulation Section
1.704-2(f)(2)-(5) apply. Such allocations shall be made in a manner consistent
with the requirements of Treasury Regulation Section 1.704-2(f) under
Section 704 of the Code. This provision is a "minimum gain chargeback" under
the meaning of Treasury Regulation Section 1.704-2(f) and shall be interpreted
as such.

(f) If there is a net decrease in Partner Non-Recourse Debt Minimum Gain
during a Partnership taxable year, then each Partner with a share of the minimum
gain attributable to such debt at the beginning of such year will be allocated
items of income (including gross income) and gain for such year (and, if
necessary, subsequent years) in proportion to, and to the extent of, an amount
equal to such Partner's share of the net decrease in Partner Non-Recourse Debt
Minimum Gain during the year. A Partner is not subject to this Partner
Non-Recourse Debt Minimum Gain chargeback to the extent that any of the
exceptions provided in Treasury Regulation Section 1.704-2(i)(4) applied
consistently with Treasury Regulation Section 1.704-2(f)(2)-(5) apply. Such
allocations shall be made in a manner consistent with the requirements of
Treasury Regulation Section 1.704-2(i)(4) under Section 704 of the Code. This
provision is a "partner nonrecourse debt minimum gain chargeback" under the
meaning of Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted as
such.

(g) If an Investor Limited Partner unexpectedly receives (1) an allocation
of loss or deduction or expenditures described in Section 705(a)(2)(B) of the
Code made (a) pursuant to Section 704(e)(2) of the Code to a donee of an
interest in the Partnership, (b) pursuant to Section 706(d) of the Code as the
result of a change in any Partner's interest in the Partnership, or (c) pursuant
to Regulation Section 1.751-1(b)(2)(ii) as a result of a distribution by the
Partnership of unrealized receivables or inventory items or (2) a distribution,
and such allocation and/or distribution would cause the negative balance in such
Partner's Capital Account to exceed (i) such Partner's share of Partnership
Minimum Gain plus (ii) such Partner's share, if any, of Partner Non-Recourse
Debt Minimum Gain plus (iii) the amount of such Partner's obligation, if any, to
restore a deficit balance in its Capital Account and such Partner's obligation
to make additional payments of its Capital Contribution to the extent permitted
under Section 704 of the Code, then such Partner shall be allocated items of
income (including gross income) and gain in an amount and manner sufficient to
eliminate such negative balance as quickly as possible. For purposes of this
Section, a Partner's Capital Account shall be treated as reduced by Qualified
Income Offset Items. This provision is a "qualified income offset" under the
meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(3) and shall be
interpreted as such.

(h) The terms "profits" and "losses" used in this Agreement shall mean
income and losses, and each item of income, gain, loss or deduction entering
into the computation thereof, as determined in accordance with Regulation
Section 1.704-1(b)(2)(iv). Profits and losses for federal

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income tax purposes shall be allocated in the same manner as profits and losses
under this Section 4.1 except to the extent provided in Sections 4.4(b),
4.4(c) and 4.4(l).

4.2 CASH DISTRIBUTIONS PRIOR TO DISSOLUTION.

(a) Cash Available for Distribution

Cash Available for Distribution for each fiscal year (or portion thereof)
shall be distributed annually, within 90 days after the end of such fiscal year,
99% to the Investor Limited Partners and 1% to the General Partner.

(b) Distributions of Proceeds from Capital Transactions

Prior to dissolution, proceeds from Capital Transactions shall be applied
or distributed, as the case may be, in the following order of priority:

(1) First, to discharge, to the extent required by any Partnership
lender or creditor, the debts and obligations of the Partnership;

(2) Second, to fund reserves for contingent liabilities to the extent
deemed reasonable by the General Partner in its sole and absolute
discretion;

(3) Third, to the repayment of any loans or advances that may have
been made by the General Partner to the Partnership;

(4) Fourth, to the Partners, Limited and General, an amount equal to
the aggregate positive balances in their Capital Accounts (determined as of
the end of the fiscal year preceding the year in which the Capital
Transaction occurs), (to be allocated to each Partner in accordance with
each Partner's ratable share of the aggregate Capital Account balances of
all Partners (as of such date); and

(5) Fifth, the balance thereof 50% to the Investor Limited Partners
and 50% to the General Partner.

4.3 TERMINATION DISTRIBUTIONS.

(a) Upon dissolution and termination, after payment of, or adequate
provision for, the debts and obligations of the Partnership, the remaining
assets of the Partnership shall be distributed to the Partners in accordance
with the positive balances in their Capital Accounts after taking into account
all Capital Account adjustments for the Partnership taxable year, including
adjustments to Capital Accounts pursuant to Section 4.1(b) and under
Section 4.3(b). In the event that the General Partner has a negative balance in
its Capital Account following the liquidation of the Partnership or its Interest
in the Partnership after taking into account all Capital Account adjustments for
the Partnership taxable year in which the liquidation occurs, the General
Partner shall pay to the Partnership in cash an amount equal to the lesser of
(a) the negative balance in such General Partner's Capital Account or (b) the
excess of 1.01% of the Capital Contributions of the Investor Limited Partners
over the Capital Contributions previously made by the General Partner. Such
payment shall be made by the end of such taxable year (or, if later, within 90
days

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after the date of such liquidation) which amount shall, upon liquidation of the
Partnership, be paid to recourse creditors of the Partnership or distributed to
other Partners in accordance with their positive balances in their Capital
Accounts.

(b) With respect to assets distributed in kind to the Partners in
liquidation or otherwise, (i) any unrealized appreciation or unrealized
depreciation in the values of such assets shall be deemed to be profits and
losses realized by the Partnership immediately prior to the liquidation or other
distribution event; and (ii) such profits and losses shall be allocated to the
Partners in accordance with Section 4.1(b), and any property so distributed
shall be treated as a distribution of an amount in cash equal to the excess of
such fair market value over the outstanding principal balance of and accrued
interest on any debt by which the property is encumbered. For the purposes of
this Section 4.3(b), "unrealized appreciation" or "unrealized depreciation"
shall mean the difference between the fair market value of such assets, taking
into account the fair market value of the associated financing (but subject to
Section 7701(g) of the Code) and the Partnership's adjusted basis for such
assets as determined under Section 1.704-1(b). This Section 4.3(b) is merely
intended to provide a rule for allocating unrealized gains and losses upon
liquidation or other distribution event, and nothing contained in this
Section 4.3(b) or elsewhere herein is intended to treat or cause such
distributions to be treated as sales for value. The fair market value of such
assets shall be determined by an appraiser to be selected by the General Partner
in its sole and absolute discretion.

4.4 SPECIAL PROVISIONS. Notwithstanding any other provision in this
Agreement:

(a) Except as otherwise provided in this Agreement, all profits, losses,
Tax Credits and cash distributions shared by the Investor Limited Partners shall
be shared by each Investor Limited Partner in the proportions set forth in
Schedule A.

(b) Income, gain, loss and deduction with respect to property which has a
variation between its basis computed in accordance with Treasury Regulation
Section 1.704-1(b) and its basis computed for Federal income tax purposes shall
be shared among Partners so as to take account of such variation in a manner
consistent with the principles of Section 704(c) of the Code and Treasury
Regulation Section 1.704-1(b)(2)(iv)(g).

(c) If any profit arises from the sale or other disposition of any
Partnership asset which shall be treated as ordinary income under the
depreciation recapture provisions of the Code, then the full amount of such
ordinary income shall be allocated among the Partners in the proportions that
the Partnership deductions from the depreciation giving rise to such recapture
were actually allocated. In the event that subsequently enacted provisions of
the Code result in other recapture income, no allocation of such recapture
income shall be made to any Partner which has not received the benefit of those
items giving rise to such other recapture income.

(d) If the Partnership shall receive any purchase money indebtedness in
partial payment of the purchase price of any of its assets and such indebtedness
is distributed to the Partners pursuant to the provisions of Section 4.2(b) or
4.3(a), the distributions of the cash portion of such purchase price and the
principal amount of such purchase money indebtedness hereunder shall be
allocated among the Partners in the following manner: On the basis of the sum
of the principal amount of the purchase money indebtedness and cash payments
received on the sale (net of amounts required to pay Partnership obligations and
fund reasonable reserves), there shall be

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calculated the percentage of the total net proceeds distributable to each class
of Partners, General and Limited, based on Section 4.2(b) or 4.3(a), treating
cash payments and purchase money indebtedness principal interchangeably for this
purpose, and the respective classes shall receive such respective percentages of
the net cash purchase price and purchase money principal. Payments on such
purchase money indebtedness retained by the Partnership shall be distributed in
accordance with the respective portions of principal allocated to the respective
classes of Partner in accordance with the preceding sentence, and if any such
purchase money indebtedness shall be sold, the sale proceeds shall be allocated
in the same proportion.

(e) Prior to making any distribution of Cash Flow or of cash attributable
to a sale or other disposition of Partnership property, the General Partner may
in its sole and absolute discretion request from any Investor Limited Partner an
affidavit or other evidence that such Investor Limited Partner is not a "foreign
person" within the meaning of Section 1445 of the Code or a person "which is not
a United States Person" within the meaning of Section 1446 of the Code. In the
event such Investor Limited Partner does not provide such affidavit or other
evidence in form and content satisfactory to the General Partner in its sole and
absolute discretion, within 30 days after request by the General Partner, the
General Partner may in its sole and absolute discretion withhold and pay over to
the Internal Revenue Service such portion of such Investor Limited Partner's
distribution as may be necessary to comply with Section 1445(e) or Section 1446
of the Code, whichever is applicable, and any amount so withheld and paid over
shall be treated as a distribution to such Investor Limited Partner at the time
it is paid over to the Internal Revenue Service.

(f) In addition to the provisions of Section 3.5, if any Investor Limited
Partner fails to make any payments of its Capital Contribution when due (either
under circumstances in which it never provided a Good Cause Notice, or if a Good
Cause Notice is given, such Investor Limited Partner is determined to be a
Defaulting Limited Partner pursuant to said Section 3.5) with the result that
(i) the Partnership or an Intermediate Partnership has insufficient funds to pay
when due an Intermediate Partnership Installment or an Operating Partnership
Installment and (ii) the Partnership's interest in an Intermediate Partnership
or an Intermediate Partnership's interest in an Operating Partnership is
reduced, any recapture which results therefrom shall be allocated solely to such
Defaulting Limited Partner. If there is more than one Defaulting Limited
Partner, the recapture described above shall be allocated among such Defaulting
Limited Partners in proportion to their respective defaulted amounts.

(g) In the event that any fee payable to any General Partner or any of its
Affiliates shall instead be determined to be a non- deductible,
non-capitalizable distribution from the Partnership to a Partner for Federal
income tax purposes, then there shall be allocated to such General Partner an
amount of gross income equal to such distribution. Furthermore, in the event
that the General Partner makes an additional Capital Contribution to the
Partnership under the circumstances set forth in Section 5.8(d), then the
calculation and allocation of profits and losses for the tax year in which such
Capital Contribution is made shall be adjusted as follows: FIRST, an amount of
Partnership deductions (consisting of deductions other than cost recovery
deductions) equal to the amount of such Capital Contribution shall be allocated
to the General Partner; and SECOND, the balance of such deductions shall be
allocated as provided in Section 4.1(a).

(h) All Partnership expenditures which constitute syndication expenses as
defined in Treasury Regulation Section 1.709-2(b) shall be allocated 1.0% to the
General Partners and

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99.0% to the Investor Limited Partners (and among the Investor Limited Partners
in accordance with the amount of such expenditures attributable to the
acquisition of their respective Interests in the Partnership).

(i) In applying the provisions of Section 4 with respect to distributions
and allocations, the following ordering of priorities shall apply:

(1) Capital Accounts shall be deemed to be reduced by Qualified
Income Offset Items.

(2) Capital Accounts shall be reduced by distributions of Cash
Available for Distribution under Section 4.2.(a).

(3) Capital Accounts shall be reduced by distributions from Capital
Transactions under Section 4.2(b).

(4) Capital Accounts shall be increased by any minimum gain
chargeback under Section 4.1(e) or 4.1(f).

(5) Capital Accounts shall be increased by any qualified income
offset under Section 4.1(g).

(6) Capital Accounts shall be increased by allocations of profits
under Section 4.1(a)

(7) Capital Accounts shall be reduced by allocations of losses under
Section 4.1(a).

(8) Capital Accounts shall be reduced by allocations of losses under
Section 4.1(b).

(9) Capital Accounts shall be increased by allocations of profits
under Section 4.1(b).

(j) To the maximum extent permitted under the Code, allocations of profits
and losses shall be modified so that the Partners' Capital Accounts reflect the
amount they would have reflected if adjustments required by Sections 4.1(e),
4.1(f) and 4.1(g) had not occurred.

(k) The Partners agree that the assets of the Partnership may be revalued
to reflect their fair market value (referred to herein as the "Book Value") and
the Capital Accounts of the Partners adjusted to reflect the difference between
Book Value and the Partnership's adjusted tax basis in such assets (or, in the
case where a prior revaluation has occurred, the Partnership's prior Book Value)
upon the admission of Investor Limited Partner(s) to the Partnership. The
General Partner is authorized to take whatever actions it deems necessary or
appropriate to effect this revaluation of assets and the equitable adjustment of
Capital Accounts on behalf of the Partnership.

(l) In the event of a revaluation of Partnership assets pursuant to
Section 4.4(k), subsequent allocations of gain, income, loss and deduction
(including, without limitation, cost

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recovery and amortization deductions) with respect to such assets for the
purpose of computing Profits and Losses shall be determined based on the Book
Value of such assets and shall be computed consistent with Treasury Regulation
Section 1.704- 1(b)(2)(iv)(g). Allocations of gain, income, loss and deduction
(including, without limitation, cost recovery and amortization deductions) for
tax purposes with respect to such assets shall be allocated among the Partners
in accordance with the principles of Section 704(c) of the Code.

(m) If the Partnership is advised at any time by the Accountants or Tax
Counsel that the allocation of any item of Partnership income, gain, loss,
deduction or Tax Credit is unlikely to be respected for tax purposes, the
General Partner may, with the Consent of the Limited Partners, amend this
Agreement to cure such defect consistent with the principles of Section 704 of
the Code and the Regulations issued thereunder.

(n) Notwithstanding any other provision of this Agreement to the contrary
that may be expressed or implied herein, the interests of the General Partner,
in each item of the Partnership income, gain, loss, deduction or credit will be
equal to at least 1% of each of those items at all times during the existence of
the Partnership.

SECTION 5. RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNER

5.1 BUSINESS MANAGEMENT; TAX MATTERS PARTNER. The General Partner shall
be exclusively responsible for the conduct of the Partnership's affairs. All
Partners hereby acknowledge and agree that the General Partner shall be the "Tax
Matters Partner" pursuant to the Code in connection with any audit of the
federal income tax returns of the Partnership. The Partnership may engage
accountants and legal counsel to assist the Tax Matters Partner in discharging
its duties hereunder. The Tax Matters Partner will promptly after receipt
thereof provide to the Investor Limited Partners copies of all notices
concerning any tax proceedings. Each Partner has the right to participate in
such proceedings relating to the determination of partnership items at the
Partnership level. Expenses of any such proceedings undertaken by the Tax
Matters Partner will be paid out of Partnership assets. Each Investor Limited
Partner which elects to participate in the proceedings will be responsible for
any expenses incurred by it in connection with such participation. The cost of
any adjustments to any Partner, and the cost of any resulting audits or
adjustments of such Partner's tax return, will be borne solely by the affected
Partner. The Tax Matters Partner agrees to contest any issue challenged by the
Internal Revenue Service on audit involving material adverse tax consequences to
the Investor Limited Partners unless it is requested by a majority in interest
of the Investor Limited Partners or it obtains the Consent of the Limited
Partners not to contest such issue. The Tax Matters Partner will not extend the
statute of limitations with respect to the Partnership nor settle any tax
proceeding without first obtaining the Consent of the Limited Partners. The Tax
Matters Partner is hereby designated as the "Notice Partner" under Section
6231(a)(8) of the Code to receive any notice provided by the Internal Revenue
Service to the Investor Limited Partners as a group in accordance with Section
6223(b)(2) of the Code and agrees to forward copies of such notices to the
Investor Limited Partners. The Tax Matters Partner shall have the right to
determine whether a challenge to a final partnership administrative adjustment
shall be initiated in an action in the Tax Court, or, with the Consent of the
Investor Limited Partners, in a Federal district court or the Federal Claims
Court.

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5.2 POWERS. Subject to Sections 5.3 and 5.12 and the other provisions of
this Agreement, the General Partner shall have all authority, rights and powers
granted to general partners pursuant to the provisions of the Uniform Act, and
shall have all the authority, rights and powers which it deems necessary or
appropriate to effect the purposes of the Partnership, including, without
limitation, the following:

(a) To acquire, hold, dispose of and otherwise deal with the Intermediate
Partnership Interests and to enter into the Intermediate Partnership Agreements
and all other agreements, instruments and documents as may be required and take
any other actions in connection with the admission of the Partnership as a
limited partner of the Intermediate Partnerships; PROVIDED that any disposition
of the Partnership's Intermediate Partnership Interests prior to the end of the
related Compliance Period shall require the Consent of the Limited Partners.

(b) In connection with the Partnership's investment in the Intermediate
Partnerships or any investment in any Intermediate Partnership, to exercise all
powers afforded limited partners under the laws of the jurisdiction in which any
Intermediate Partnership is organized consistent with the terms of this
Agreement, including, without limitation, the power (i) to execute, deliver and
perform the terms, covenants and obligations of any Intermediate Partnership
Agreement and all other agreements, instruments and other documents as may be
necessary or appropriate in connection with the business and operations of such
Intermediate Partnership, (ii) to give or withhold the consent or approval of
the Partnership, in its capacity as a limited partner of any Intermediate
Partnership to any action proposed to be taken by such Intermediate Partnership
for which such consent is required, including with respect to the sale of any
Property or Operating Partnership Interest or the refinancing of any Mortgage,
(iii) to vote to amend the Intermediate Partnership Agreement of such
Intermediate Partnership in any manner as to change its Intermediate Partnership
Interest, to vote to change its Intermediate Partnership Interest in the
profits, losses and cash distributions of such Intermediate Partnership or to
assign (or grant a security interest) in a part or all of its Intermediate
Partnership Interest, (iv) to amend the Intermediate Partnership Agreement of
any Intermediate Partnership in the manner provided therein and to vote on any
issue for which the Partnership, as a partner of such Intermediate Partnership,
may vote, and (v) to exercise the right to cause Affiliates of the General
Partner to become an Intermediate General Partner, including the sole
Intermediate General Partner, in the event of the bankruptcy, death,
dissolution, withdrawal, removal or adjudication of incompetence of an
Intermediate General Partner, or in the event of a material default by the
Intermediate General Partner or any affiliates under any obligations of such
Intermediate General Partner or affiliate to the Intermediate Partnership, or
the Partnership or upon the occurrence of certain other events; provided that
the General Partner determines in good faith that the exercise of any such power
would best protect the interest of the Partnership with respect to any
Intermediate Partnership or is otherwise in the best interests of the
Partnership and the Partners, and provided further that the exercise of such
power does not conflict with any other provision of this Agreement, including,
without limitation, Section 5.3. In addition to and without limiting the
foregoing or any other rights provided for in this Agreement, the General
Partner shall have the right (and shall be obligated to make all determinations
with regard to the exercise of such right in a manner consistent with its
fiduciary duty to the Partnership and the Investor Limited Partners) to exercise
the Partnership's rights as a limited partner of the Intermediate Partnerships
and to exercise the Intermediate Partnership's rights as a partner of an
Operating Partnership including, without limitation, to cause the removal of the
general partner of an Intermediate Partnership or

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the managing or general partner of an Operating Partnership, as the case may be,
under circumstances permitted by the Operative Documents.

(c) To employ, contract and deal with, from time to time, any Persons,
including any Partner or Affiliate of any Partner, in connection with the
offering or the management and operation of the Partnership business, on such
terms as the General Partner shall determine in its sole and absolute
discretion.

(d) To acquire, by purchase or otherwise, hold, dispose of and otherwise
deal with such personal property as may be necessary, convenient or incidental
to the accomplishment of the purposes of the Partnership, provided that if the
acquisition or disposition of such property is not specifically authorized under
other provisions of this Agreement, then such property may not be acquired or
disposed of without the Consent of the Limited Partners (unless the acquisition
or disposition occurs in the ordinary course of the Partnership's business and
involves an expenditure of, or the fair market value of the property to be
disposed of is, $10,000 or less).

(e) To bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the
Partnership.

(f) To pay as a Partnership expense any and all costs or expenses
associated with the formation, development, organization and operation of the
Partnership.

(g) To deposit, withdraw, invest, pay, retain and distribute the
Partnership's funds in a manner consistent with this Agreement.

(h) To the extent provided for in other provisions of this Agreement and
subject to those terms set forth in this Agreement, to borrow money and issue
evidences of indebtedness in furtherance of any or all of the purposes of the
Partnership on such terms and conditions as the General Partner shall in its
reasonable discretion determine, including borrowings from the General Partner
or its Affiliates, and to secure the same by grant of security interests in
assets of the Partnership (except as otherwise provided in Section 3.4) as the
General Partner shall in its reasonable discretion determine (which may include
borrowings from the General Partner or its Affiliates or others for the purpose
of paying fees, costs and expenses to the General Partner or its Affiliates).

(i) Subject to Sections 9.6 and 9.7, to make such elections under the Code
and other relevant tax laws as to the treatment of items of Partnership income,
gain, loss, deduction and credit, and as to all other relevant matters, as the
General Partner deems necessary or appropriate, including, without limitation,
elections referred to in Section 754 of the Code, selection of the manner and
method of determining depreciation of the capital assets of the Partnership,
determination of which items of cash outlay are to be capitalized or treated as
current expenses, and selection of the method of accounting and bookkeeping
procedures to be used by the Partnership.

(j) To require in any or all Partnership contracts that the General
Partner shall not have any personal liability thereon but that the Person
contracting with the Partnership shall look solely to the Partnership and its
assets for satisfaction.

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(k) To cause any obligation with respect to which the General Partner is
personally liable to be paid in preference to obligations for which no Partner
is liable.

(l) To become qualified as a foreign limited partnership in the states in
which the Properties are located or in any other jurisdiction in which the
General Partner deems such qualification to be in the interests of the
Partnership.

(m) To establish, maintain and augment Reserves to the extent the General
Partner shall deem appropriate, in its reasonable discretion, to effect the
immediate and long-term objectives of the Partnership.

(n) To make loans or advances to (including Mortgages), contract and
otherwise deal with, from time to time, any Operating Partnership or Affiliate
of any Operating Partnership.

(o) To enter into any kind of activity and to perform and carry out
contracts of any kind necessary to, or in connection with, or incidental to the
accomplishment of the purposes of the Partnership, so long as said activities
and contracts may be lawfully carried on or performed by a partnership under the
laws of the State.

(p) To compromise the obligation of a Partner to make a contribution to
the capital of the Partnership or to return to the Partnership money or other
property paid or distributed to such Partner in violation of the Uniform Act.

(q) To cause or permit an Operating Partnership to grant an option to
acquire the Property owned by such Operating Partnership following the end of
the Compliance Period for an option price equal to the fair market value of the
Property as of the date of purchase as determined by an appraisal obtained by
the Operating Partnership at any time after the Initial Funding Date, but only
if (i) Consent of the Limited Partners (not to be unreasonably withheld) shall
have been given as to the compliance of the form and methodology of such
appraisal with proper appraisal standards and (ii) the Partnership shall have
received an opinion from Tax Counsel that it is more likely than not that the
granting of the option will not cause the Operating Partnership to fail to be
treated as the owner of Property for Federal income tax purposes.

(r) To execute, acknowledge and deliver any and all instruments to
effectuate the foregoing.

5.3 RESTRICTIONS ON AUTHORITY; ADDITIONAL OBLIGATIONS.

(a) Notwithstanding any other provisions of this Agreement, the General
Partner shall have no authority to do any of the following acts without the
Consent of the Limited Partners (which Consent may be withheld in their absolute
discretion):

(1) to sell, exchange or otherwise transfer or convey all or
substantially all the assets of the Partnership at one time; or

(2) to admit any additional Investor Limited Partners (except
Substituted Investor Limited Partners or as otherwise permitted
pursuant to Section 7.3(f)); or

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(3) To file, or acquiesce in the filing of, any bankruptcy proceeding
by the Partnership, any Intermediate Partnership or any Operating
Partnership or to knowingly cause the Partnership to voluntarily
take any action that would cause an Event of Bankruptcy; or

(4) To hire, or acquiesce in the hiring of, any natural persons as
employees (as opposed to independent contractors) of the
Partnership or any Intermediate Partnership; or

(5) To place record title to, or the right to use, Partnership assets
in the name or names of a nominee or nominees, or trustee or
trustees, for any purpose; or

(6) To incur indebtedness for money borrowed, whether or not secured
by the Partnership, Intermediate Partnership or Operating
Partnership assets, except as specifically permitted by the
Operative Documents, or to provide any guarantee or grant a
security interest with respect to any Partnership assets or any
lien thereon not in the ordinary course of business; or

(7) to amend, modify, supplement or terminate any Operative Document,
or to permit any party thereunder to waive any provision thereof,
to the extent that the effect of such amendment or waiver would
be (A) to eliminate or diminish or defer any obligation or
undertaking of the General Partner or any Affiliate thereof which
accrues, directly or indirectly, to the benefit of, or provides
additional security or protection to the Investor Limited
Partners (notwithstanding that any Investor Limited Partner is
neither a party to nor an express beneficiary of such provision
or was not a Partner when such provision became effective), or
(B) to increase the liability, or impair the limited liability,
of any Investor Limited Partner; or

(8) to confess a judgment against the Partnership or to commence
substantial litigation; or

(9) to perform any act that would subject any Investor Limited
Partner to liability as a general partner in any jurisdiction; or

(10) to elect to dissolve the Partnership or permit or consent to the
dissolution or liquidation of any Intermediate Partnership or
Operating Partnership; or

(11) to effect, permit, consent to the merger or consolidation of the
Partnership into or with another entity, or the acquisition by
the another entity, or the acquisition by the Partnership of all
or substantially all of the assets of one or more entities (other
than the acquisition of the interests in the Intermediate
Partnerships contemplated by the Operative Documents); or

(12) to approve any construction on a Property in addition to that
contemplated in its Operating Partnership Agreement or the
acquisition of any interest in real estate by an Operating
Partnership in addition to that contemplated in

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its Operating Partnership Agreement or the acquisition of
additional partnership interests by the Intermediate
Partnerships; or

(13) to permit, consent to or acquiesce in the admission of additional
partners to any Intermediate Partnership or Operating Partnership
other than as explicitly provided in the Operative Documents; or

(14) to permit or consent to the prepayment of any Mortgage or Bridge
Loan by the Partnership, the Operating Partnerships or the
Intermediate Partnerships; or

(15) to waive any defaults under the Operative Documents by any
Affiliate of the General Partner if such waiver is a breach by
the General Partner of its fiduciary duty to the Partnership and
the Investor Limited Partners; or

(16) to permit or consent to the amendment of an Intermediate
Partnership Agreement or Operating Partnership Agreement to
require or permit additional capital contributions by the
partners thereof or take other actions if such amendment,
additional capital contributions or other actions would alter the
profits, losses, credits and cash distributions allocable or
distributable to the partners thereof;

(17) to permit or consent to the admission of a co-general partner in
the Intermediate Partnerships or the substitution of an
Intermediate General Partner;

(18) to grant any consent by the Partnership as a limited partner of
any Intermediate Partnership; or

(19) To permit or consent to any change in the casualty or liability
insurance coverage from that required to be maintained pursuant
to any Operating Partnership Agreement or other Operative
Document as in effect on the date hereof.

(b) The General Partner shall promptly notify the Investor Limited
Partners of any material default under any of the Operative Documents,
including, without limitation, any defaults by Affiliates of the General Partner
of which the General Partner has knowledge or should have knowledge in the
exercise of its duties under the Operative Documents.

(c) The General Partner shall have no authority to do any act in violation
of applicable law or required to be approved or ratified by all limited partners
under the Uniform Act without the prior written consent of all Investor Limited
Partners.

5.4 DUTIES AND OBLIGATIONS OF THE GENERAL PARTNER.

(a) The General Partner shall devote to the affairs of the Partnership
such time and resources as are reasonable and necessary for the proper
performance of its duties hereunder and shall use reasonable efforts to carry
out the purpose and objectives of the Partnership.

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(b) If at any time the aggregate net worth (calculated on the basis of
fair market values of assets) of the General Partner shall decrease below
$500,000, the General Partner shall consult with Tax Counsel and, if such
counsel is of the opinion that such reduction might adversely affect the
treatment of the Partnership as such for Federal income tax purposes, the
General Partner shall use its best efforts either (i) to admit one or more
Persons as a general partner of the Partnership holding at least a 1% Interest
and having a combined net worth (calculated as aforesaid) equal to or greater
than $500,000 or (ii) to obtain additional capitalization sufficient to increase
the net worth (calculated as aforesaid) to at least $500,000.

(c) The General Partner shall cause an amendment to the Original
Certificate (reflecting the necessary changes thereto pursuant to the terms of
this Agreement) to be filed in the Filing Office in accordance with the
provisions of the Uniform Act and to take any and all other actions reasonably
necessary to perfect and maintain the status of the Partnership as a limited
partnership under the laws of the State, Iowa and Florida and in order to
qualify the Partnership under the laws of any jurisdiction in which the
Partnership is doing business or in which such qualification is necessary to
protect the limited liability of the Investor Limited Partners or in order to
continue in effect such qualification. The General Partner shall cause
amendments to the Certificate and other certificates, including limited
partnership and fictitious name certificates, and other documents as are
required by the applicable statutes, rules or regulations of any such
jurisdiction to be filed whenever and wherever required by the Uniform Act or by
the laws governing limited partnerships in effect in Iowa and Florida and any
other jurisdiction in which the Partnership is doing business. Such amendments
may be executed by the General Partner and, where such amendment reflects the
admission of a new general partner and to the extent required by the Uniform
Act, shall be executed by the existing General Partner and by any Person
designated in the amendment as a new general partner of the Partnership.

(d) The General Partner shall have fiduciary responsibility for the
safekeeping and use of all funds and assets of the Partnership, whether or not
in its immediate possession or control. The General Partner shall not employ,
or permit any other Person to employ, such funds or assets in any manner except
for the exclusive benefit of the Partnership.

(e) The General Partner shall not contract away the fiduciary duty owed at
common law to limited partners and shall use commercially reasonable efforts to
comply with all laws and regulations (including, without limitation,
Environmental Laws) affecting the Partnership or the business of the
Partnership.

(f) To the extent required by its fiduciary duty to the Partnership and
the Investor Limited Partners, the General Partner shall diligently exercise all
of its rights, and all of the rights of the Partnership on behalf of the
Partnership, to cause the Intermediate Partnerships, the Operating Partnerships
and the partners thereof to comply with the provisions of the Operative
Documents.

5.5 DUTIES AND OBLIGATIONS WITH RESPECT TO ENVIRONMENTAL MATTERS.

(a) The General Partner shall have no authority to do and will not approve
of or consent to any of the following activities: (i) treatment or disposal of
any Contaminant (as defined in the Subscription Agreement) at any of the
Properties; (ii) generation, use, handling or storage at any of the Properties
of any waste other than office trash or household waste or any

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Contaminant other than of a type and in quantities normally associated with the
use for which the Properties are intended as of the date of this Agreement; or
(iii) generation, use, handling, storage, transportation, disposal or
arrangement for transportation or disposal of any Contaminant required to have a
manifest under 40 C.F.R. Part 262.

(b) Upon obtaining notice, and consistent with the Partnership's status in
any of the Intermediate Partnerships, the General Partner shall use commercially
reasonable efforts to enforce, and under no circumstances shall waive any
Intermediate Partnership Agreement or Operating Partnership Agreement provisions
which (1) prohibit any of the Properties from being in violation of
Environmental Laws (as defined in the Subscription Agreement); (2) address or
require correction of or action with respect to any of the following conditions
or events: (i) the Release (as defined in the Subscription Agreement) or
threatened Release of any Contaminant from any of the Properties; (ii) the
incurrence of any expense or loss by any Person in connection with the
investigation, assessment, cleanup, containment or removal of any Contaminant or
any Environmental Damages (as defined in the Subscription Agreement) for which
the General Partner, the Partnership or any of the Intermediate Partnerships or
any of the Operating Partnerships may be liable; (iii) the imposition of any
Environmental Lien (as defined in the Subscription Agreement) on any of the
Properties; or (iv) the presence of any Contaminant in, on, at or under any of
the Properties in concentrations or quantities that exceed safe limits
established by applicable Environmental Laws; (3) require the Operating
Partnerships and any managing agents for or Persons performing work at the
Properties to comply with all Environmental Laws applicable to the Properties,
including the use, maintenance and operations of the Properties and all
activities and conduct related thereto; or (4) prohibit (i) treatment or
disposal of any Contaminant at any of the Properties; (ii) generation, use,
handling or storage at any of the Properties of any waste other than office
trash or household waste or any Contaminant other than of a type and in
quantities normally associated with the use for which the Properties are
intended as of the date of this Agreement; or (iii) generation, use, handling,
storage, transportation, disposal or arrangement for transportation or disposal
of any Contaminant required to have a manifest under 40 C.F.R. Part 262.

5.6 OTHER ACTIVITIES. Partners and any of their Affiliates may engage or
possess an interest, independently or with others, in other businesses or
ventures of every nature and description, including without limitation
development and operation of real estate in competition with the Partnership or
any of the Operating Partnerships, and neither the Partnership nor any other
Partner shall have any rights in or to such ventures or the income or profits
derived therefrom.

5.7 DISTRIBUTIONS. Except as provided in Section 4, each Partner shall
look solely to the assets of the Partnership for all distributions and share of
profits or losses and shall have no recourse therefor (upon dissolution or
otherwise) against any other Partner. No Partner shall have any right to demand
or receive property other than money upon dissolution and termination of the
Partnership, except as otherwise expressly provided for herein.

5.8 CERTAIN PAYMENTS. Without limiting the other powers set forth herein,
the General Partner is expressly authorized for, in the name of, and on behalf
of, the Partnership to:

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(a) Pay in connection with the offering of Interests in the
Partnership, commissions to Capstar Partners, Inc. in an amount up to 2% of the
gross Capital Contributions of the Investor Limited Partners.

(b) Pay to the General Partner or Affiliate(s) thereof in
consideration of the services of the General Partner in connection with the
organization of the Partnership, a fee (the "Organization Fee") in the amount of
4% of the gross Capital Contributions of the Investor Limited Partners.

(c) Pay to the General Partner a nonaccountable allowance for all
costs and expenses of (i) offering interests to the Investor Limited Partners in
an amount equal to 1% of the gross Capital Contributions of the Investor Limited
Partners and (ii) organizing the Partnership in an amount equal to 1.25% of the
gross Capital Contributions of the Investor Limited Partners. The General
Partner shall be obligated to pay on behalf of the Partnership all of such costs
and expenses, without regard to whether such costs and expenses exceed or are
less than the aforesaid allowance. In particular, and without limiting the
foregoing, the General Partner shall (A) pay out-of-pocket disbursements
incurred by Orion and Polar since May 19, 1995 in connection with the
transactions contemplated by the Operative Documents, and (B) pay to Dewey
Ballantine its fees and disbursements as counsel to Orion and Polar, in each
case in such amounts as shall be mutually agreed among the Partners on or prior
to the Initial Funding Date.

(d) Pay to the General Partner or Affiliate(s) thereof a fee (the
"Asset Management Fee"), for performing those services in connection with the
management of the affairs of the Partnership as set forth in a certain Asset
Management Agreement of even date herewith between the Partnership and the
General Partner, in the amount of the excess of (i) the gross Capital
Contributions of the Investor Limited Partner over (ii) the aggregate amount
necessary to pay the costs incurred in connection with acquisition of its
interest in the Intermediate Partnerships, make all payments required from the
Intermediate Partnerships to the Operating Partnerships, repayment in full of
the Bridge Loan and the payment of the fees and allowances set forth in
Sections 5.8(a) through (d) and the funding of the Capital Reserve. In the
event that the Asset Management Fee determined pursuant to the foregoing
following payment of the Fourth Installment shall be less than $1,268,000, the
General Partner shall make an additional Capital Contribution to the Partnership
on or before the end of the calendar year in which the Fourth Installment is
paid in an amount sufficient to enable the Partnership to pay the Asset
Management Fee in the full amount of $1,268,000.

(e) Pay to the General Partner a noncumulative fee (the "Incentive
Management Fee") in respect of each year or portion thereof (i) during the
period commencing on the Initial Funding Date and ending on the last day of the
fifth full fiscal year after the Initial Funding Date, an annual amount equal to
50% of any Cash Flow, and (ii) for each fiscal year or portion thereof
commencing with the sixth full fiscal year after the Initial Funding Date, the
sum of (A) an annual amount equal to $125 multiplied by the number of apartment
units owned by each Operating Partnership which Operating Partnership has
positive cash flow (as computed pursuant to its Operating Partnership Agreement)
for such year or portion thereof, plus (B) an annual amount equal to 50% of any
Cash Flow for such fiscal year or portion thereof (after deducting from Cash
Flow the amount payable for such fiscal year or portion thereof under
clause (A)), plus (C) any balance in the Capital Reserve which is released
pursuant to Section 5.10.

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(f) Pay to the General Partner or Affiliate(s) thereof (i) upon any
sale of a Property or an Operating Partnership Interest, a fee (the "Disposition
Fee") for arranging, structuring, negotiating and closing such sale and
(ii) upon the refinancing of any Mortgage (subsequent to initial permanent
financing on each Property), including extension or permitted restructuring of
any existing Mortgage a fee (the "Refinancing Fee") for arranging, structuring,
negotiating and closing such refinancing; provided, however, that any such
Disposition Fee or Refinancing Fee shall not exceed, when combined with any
other fees or commissions payable by the the Intermediate Partnership or the
Operating Partnership (whether or not to Affiliates of the General Partner) in
connection with each such sale or refinancing, an amount equal to 4.0% of the
gross sale price or the principal amount of the refinanced Mortgage.

The fees and reimbursements to the Partners or their Affiliates set forth in
paragraphs (a) through (d) of this Section 5.8 shall be payable from Capital
Contributions of the Investor Limited Partners and/or Bridge Loan proceeds as
and when provided herein, or if not specifically provided, as and when the
General Partner shall determine and without regard to the income of the
Partnership, provided, however, that one or more of the payments authorized
under paragraphs (a) through (d) of this Section 5.8 shall be reduced or
refunded by the General Partner as it shall determine in its sole discretion to
account for any delay in payment, reduction or return of Capital Contributions
to the Investor Limited Partners under this Agreement and that any payment made
pursuant to paragraph (d) of this Section shall be refunded by the General
Partner to the extent required to pay the amounts described in clause (ii)
thereof in full.

5.9 AGREEMENTS WITH OPERATING PARTNERSHIPS.

(a) The General Partner and its Affiliates are authorized to make loans or
advances to (including Mortgages which shall be non-recourse (except that there
may be recourse for fraud, misapplication of funds, material misrepresentation
and environmental liability and there may be Partner Non-Recourse Debt) and non
cross-collateralized)), contract and otherwise deal with, from time to time, any
Operating or Intermediate Partnership or Affiliate of any Operating Partnership
and in connection therewith to receive fees, prices or other compensation to the
extent already paid or provided to be paid pursuant to any presently existing
Operating Partnership Agreement or related agreement (the "Current
Arrangements"), and otherwise in a maximum total principal amount not exceeding
$180,000 and on terms no less favorable to such Operating Partnership than would
be applicable if such Persons were not Affiliates of the General Partner;
provided however, that in each such instance other than the provision of the
Current Arrangements or any Permanent Mortgage or Standby Permanent Mortgage,
the General Partner shall cause to be offered to the Investor Limited Partners
the opportunity to provide or participate in such loan or advance on a pro rata
basis (acceptance of which offer must be made in writing within 10 days after
notice of such offer is received by the Investor Limited Partners).

(b) If the construction financing for a Property shall mature and the
Operating Partnership which owns that Property shall have been unable to obtain
permanent financing on a non- recourse (except that there may be recourse for
fraud, misapplication of funds, material misrepresentation and environmental
liability and there may be Partner Non-Recourse Debt) and non
cross-collateralization basis with a term of at least 15 years, in an amount at
least sufficient to fully repay such construction financing, AMLIC will provide
or cause its Affiliate to provide a "Standby Permanent Mortgage" which, at its
sole option, will be either first mortgage permanent financing in an amount
sufficient to fully repay such construction financing, or second mortgage

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permanent financing in an amount which, when added to the first mortgage
permanent financing available to the Operating Partnership (which shall meet all
conditions of permanent financing described above except as to amount), will be
sufficient to fully repay such construction financing. A Standby Permanent
Mortgage will (i) be in an amount sufficient to repay such construction
financing as provided above, (ii) be for a term of at least 15 years, (iii) be
payable in equal monthly installments based on an amortization schedule of at
least 25 years, (iv) be on a non-recourse (except that there may be recourse for
fraud, misapplication of funds, material misrepresentation and environmental
liability and there may be Partner Non-Recourse Debt) and non
cross-collateralized basis, (v) bear interest at a rate equal to then prevailing
market rates for comparable financing and (vi) provide for the accrual (and the
addition thereof to principal) of any portion of debt service payments which
exceeds the sum of Operating Partnership "Net Operating Income" (operating
revenues less operating expenses and required deposits to reserves) plus any
Operating Partnership reserves available to pay debt service plus operating
deficit loan advances due from the Operating General Partners, with such accrued
amounts and interest thereon to be paid from any future Net Operating Income of
the Operating Partnership in excess of debt service. Notwithstanding the
foregoing, however, no such accrual shall be required and such Standby Permanent
Mortgage may be declared in default at any time when the sum of Net Operating
Income of the Operating Partnership plus such reserves and advances shall be
less than then applicable Minimum Required Debt Service. "Minimum Required Debt
Service" shall be that amount which would yield 105% debt service coverage on
the aggregate debt comprising any Permanent Mortgage and Standby Permanent
Mortgage based on Net Operating Income of the Operating Partnership for the six
month period prior to the closing of such Standby Permanent Mortgage as
determined by the Accountants.

5.10 PARTNERSHIP RESERVES AND PAYMENT OF EXPENSES.

(a) The General Partner shall establish, and invest in such Temporary
Investments as the General Partner shall determine in its reasonable discretion,
the following segregated reserve accounts in the name and for the sole and
exclusive benefit of the Partnership: (i) a reserve account (the "Operating
Reserve") which shall be funded in an amount not less than 50% of Cash Flow for
each fiscal year through and including the fifth full fiscal year following the
date hereof, and thereafter in the reasonable discretion of the General Partner;
and (ii) a reserve account (the "Capital Reserve") which shall be funded in the
total amount of $750,000 from the gross Capital Contributions of the Investor
Limited Partners ($250,000 from the first payments made of each of the Second,
Third and Fourth Installments thereof). Any interest or other earnings on the
monies held in the Capital Reserve or the Operating Reserve shall be held and
become a part of such Reserve.

(b) All expenses of the Partnership, including reimbursement to the
General Partner for all direct expenses reasonably incurred in connection with
the affairs of the Partnership, shall be paid from available Partnership funds,
including (except as to the allowances referred to in Section 5.8(c) or unless
otherwise specified hereunder) funds in the Operating and Capital Reserves, as
the General Partner shall determine in good faith. Without limiting the
generality of the foregoing, the General Partner intends to pay or reimburse
Partnership expenses first from available Partnership funds or Reserves other
than the Operating Reserve and the Capital Reserve and next from the Operating
Reserve. In any event expenses shall be paid last from the Capital Reserve.

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(c) If the General Partner determines, at any time after the end of the
fifth full fiscal year of the Partnership following date hereof, in its
reasonable discretion that, after giving effect to such release, the aggregate
balance in the Capital Reserve, the Operating Reserve and any other Partnership
reserve exceeds the amount required for Partnership purposes, funds in the
Capital Reserve shall be released and applied to payment of the Incentive
Management Fee (as provided in Section 5.8(e)); provided, however, that no such
release shall reduce the then combined balance in the Capital Reserve and the
Operating Reserve to less than $250,000 until the end of the tenth full fiscal
year following the date of this Agreement.

5.11 LIMITATION OF LIABILITY; INDEMNIFICATION. (a) The General Partner and
its Affiliates shall have no liability to the Partnership or to any Partner for
any loss suffered by the Partnership or any Partner (i) which arises out of any
action or inaction of the General Partner or its Affiliates if (x) such action
or inaction has been taken pursuant to affirmative instructions of 50% in
interest of the Investor Limited Partners, or (y) the General Partner or its
Affiliates, in good faith, determined that such action or inaction was in the
best interest of the Partnership and such action or inaction did not constitute
gross negligence, breach of fiduciary duty, material breach of this Agreement or
any Operative Document or willful misconduct of the General Partner or such
Affiliates or (ii) which arises out of any circumstances existing or events
occurring prior to the Initial Funding Date to the extent that such liabilities,
loss, damage, fees, costs and expenses, judgments or amounts paid in settlement
arise from those circumstances or events for which, and to the extent, amounts
have been provided or reserved for in the Initial Projections or otherwise
budgeted for by the Partnership, Intermediate Partnership or Operating
Partnership as of the Initial Funding Date or to the extent the General Partner
did not have and should not reasonably have had after commercially reasonable
diligence, actual knowledge. The General Partner and its Affiliates shall be
indemnified by the Partnership against any losses, judgments, liabilities,
expenses and amounts paid in settlement of any claims sustained by them in their
capacity as General Partner in connection with the Partnership, provided that
the same were not the result of negligence, breach of fiduciary duty, material
breach of this Agreement or any Operative Document or misconduct on the part of
the General Partner or such Affiliates and were the result of a course of
conduct which such General Partner or its Affiliates, in good faith, determined
was in the best interest of the Partnership and provided further that the same
do not arise from any circumstances existing or events occurring prior to the
Initial Funding Date. Any indemnity under this Section 5.11(a) shall be
provided out of and to the extent of Partnership assets only and no Investor
Limited Partner shall have any personal liability on account thereof.
Notwithstanding the foregoing, the General Partner and its Affiliates shall not
be indemnified for any Environmental Damages arising from any violation of any
Environmental Laws by the General Partner, the Partnership, any of the
Intermediate Partnerships, any Intermediate General Partner, either of the
Operating Partnerships relating to the Properties in Iowa (namely, 65th Street
Partnership and 60th Street Partnership) or the Operating General Partner of
either of those two Operating Partnerships.

(b) The General Partner shall defend, indemnify and hold harmless the
Partnership, the Investor Limited Partners and the Indemnitees from any
liability, loss, damage, fees, costs and expenses, judgments or amounts paid in
settlement, including, without limitation, any Environmental Damages, incurred
by reason of (i) matters as to which the General Partner is not absolved of
liability pursuant to the first sentence of Section 5.11(a), (ii) Tax Credit
recapture or the cost of the posting of any bond pursuant to Section 42 of the
Code suffered by any Investor Limited Partner arising from the loss of ownership
of a Property due in whole or in part to the

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stated maturity date (not by reason of acceleration) of the permanent Mortgage
being earlier than the end of the Compliance Period for such Property or (iii)
the ownership by the Intermediate Partnership known as CPI Housing Partners I,
L.P. of an interest in Chimney Ridge Partners, Ltd. (a South Carolina limited
partnership) or the assignment of such interest by such Intermediate
Partnership.

Notwithstanding Section 5.11(a), the General Partner and its Affiliates and
any Person acting as a broker-dealer shall not be indemnified for any losses,
liabilities or expenses arising from or out of any alleged violation of Federal
or state securities laws unless (i) there has been a successful adjudication on
the merits of each count involving alleged securities law violations as to the
particular indemnitee and the court approves indemnification of litigation
costs, or (ii) such claims have been dismissed with prejudice on the merits by a
court of competent jurisdiction as to the particular indemnitee and the court
approves indemnification of litigation costs, or (iii) a court of competent
jurisdiction approves a settlement of the claims against a particular indemnitee
and finds that indemnification of the settlement and related costs should be
made.

In any claim for indemnification for Federal or state securities law
violations, the party seeking indemnification shall place before the court the
position of the Securities and Exchange Commission (and the position of any
state securities administrator whose rules or published policies require such
disclosure, if the Interests were sold or any Investor Limited Partner is
headquartered in such state) with respect to the issue of indemnification for
securities law violations.

The Partnership shall not incur the cost of that portion of any insurance,
other than public liability insurance, which insures any party against any
liability the indemnification of which is herein prohibited.

For purposes of this Section 5.11 only, the term "Affiliate" shall mean any
person performing services on behalf of the Partnership, within the scope of
authority of the General Partner, who (i) directly or indirectly controls, is
controlled by or is under common control with the General Partner; (ii) owns or
controls 10% or more of the outstanding voting securities of the General
Partner; (iii) is an officer, director, partner or trustee of the General
Partner; or (iv) is any company for which the General Partner acts as officer,
director, partner or trustee.

5.12 AFFILIATES. Subject to Section 5.3(a)(4), the Partnership is
authorized to employ, contract and deal with, from time to time, any Partner
(including the General Partner) or any Affiliate, and in connection therewith to
pay such Person fees, prices or other compensation, provided that such
employment, contracts and dealings are necessary or appropriate for Partnership
purposes and the fees, prices or other compensation paid by the Partnership
therefor is, in the judgment of the General Partner, reasonable or competitive
with the fees, prices or other compensation customarily paid for similar
property or services in the same geographic area.

5.13 BORROWINGS.

(a) Subject to Section 5.3, the Partnership is authorized to borrow Bridge
Loans and also to borrow funds from the General Partner or its Affiliates
provided that such borrowings from the General Partner or its Affiliates shall
be unsecured and the Partnership may not pay in connection therewith (i)
interest or other financing charges or fees in excess of the amounts which

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would be charged by unrelated lending institutions on comparable loans for the
same purpose in the same locality or (ii) any prepayment charge or penalty. If
any Partner shall lend any monies to the Partnership, the amount of any such
loan shall not be an increase of such Partner's Capital Contribution and shall
not affect such Partner's share of profits, losses, Tax Credits and
distributions.

(b) AMLIC shall be obligated to make (or cause its Affiliate to make)
loans to the Partnership in such amounts, and from time to time, as shall be
necessary to permit the Partnership to make capital contributions to the
Intermediate Partnerships equal to capital contributions to be made by the
Intermediate Partnerships to the Operating Partnerships, and to pay fees and
other expenses payable from time to time by the Partnership ("Bridge Loans").
The Bridge Loan: (i) shall be made upon written demand by the General Partner
as needed by the Partnership to meet its aforesaid cash requirements after
application of all other available funds of the Partnership (provided that no
advance shall be required at any time when the then outstanding principal
balance of the Bridge Loan plus a reasonable projection of interest accruing
thereon will exceed the total future Capital Contributions expected to be
payable by the Investor Limited Partners); (ii) bear interest at a fixed rate
equal to 10.0% per annum; (iii) shall be repaid from the Capital Contributions
of the Investor Limited Partners upon receipt thereof and before any other
application thereof; and (iv) shall be unsecured.

5.14 DELEGATION OF GENERAL PARTNER AUTHORITY. If at any time there shall
be more than one General Partner serving hereunder, each General Partner may
from time to time, by an instrument in writing, delegate all or any of its
powers or duties hereunder to another General Partner or General Partners.

5.15 EXECUTION OF INSTRUMENTS. Every contract, deed, mortgage, lease and
other instrument executed by any General Partner shall be conclusive evidence in
favor of every Person relying thereon or claiming thereunder that at the time of
the delivery thereof that (a) the Partnership was in existence, (b) this
Agreement had not been amended in any manner so as to restrict the delegation of
authority among General Partner (except as shown in certificates or other
instruments duly filed in the Filing Office) and (c) the execution and delivery
of such instrument was duly authorized by the General Partner. Any Person may
always rely on a certificate addressed to him and signed by the General Partner
hereunder:

(1) As to the identity of the General Partner or Investor Limited
Partners hereunder;

(2) As to the existence or nonexistence of any fact which constitutes
a condition precedent to acts by the General Partner or is in any other
manner germane to the affairs of this Partnership;

(3) As to who is authorized to execute and deliver any instrument or
document of the Partnership; or

(4) As to the authenticity of any copy of this Agreement and
amendments thereto.

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5.16 PURCHASE OF CERTAIN OPERATING PARTNERSHIP INTERESTS. In the event
that, on June 15, 1997, with respect to any Property (i) the Completion Date and
8609 Issuance shall not have occurred, (ii) 80% of the apartment units therein
shall not have been occupied by tenants meeting Tax Credit requirements or (iii)
Permanent Mortgage Closing shall not have occurred, then, the General Partner
shall cause AMLIC to purchase (or cause another party to purchase) within 15
business days the interest of the Partnership in the Intermediate Partnership
which has an interest in such Property for the purchase price set forth below,
which price shall then be distributed to the Investor Limited Partners as a
return of capital. The purchase price to be paid pursuant to this Section 5.16
shall be an amount determined by the Accountants, based on their recomputation
of the Initial Projections to reflect the disposition of such Interest, any
transaction costs, Tax Credit recapture (or the cost of posting any bond) and
any other Federal income tax cost resulting from such purchase and the aforesaid
distribution to the Investor Limited Partners of the purchase price (but no
other changes) in order to achieve an Internal Rate of Return of 12.26%.

SECTION 6. RIGHTS AND LIABILITIES OF LIMITED PARTNERS

6.1 LIABILITY OF LIMITED PARTNERS.

(a) No Investor Limited Partner shall be liable for any debts,
liabilities, contracts, or obligations of the Partnership. An Investor Limited
Partner shall be liable only to make payments of its Capital Contribution as and
when due hereunder. After its Capital Contribution shall be fully paid, no
Investor Limited Partner shall be required to make any further capital
contributions or lend any funds to the Partnership or to repay to the
Partnership, any Partner or any creditor of the Partnership any portion of any
negative balance in its Capital Account, except as otherwise required by the
Uniform Act or Section 6.1(b).

(b) In the event the Partnership is required, pursuant to applicable law,
to return to any Intermediate Partnership any funds previously distributed by
such Intermediate Partnership to the Partnership, which funds have been
distributed by the Partnership in turn to the Investor Limited Partners
hereunder, the Investor Limited Partners shall, upon notice from the General
Partner, return promptly as a Capital Contribution to the Partnership that
portion of such Partnership distribution (in proportion to the amounts
distributed to them) as shall be required by the Partnership to meet its
obligation to return funds to such Intermediate Partnership.

6.2 NO RIGHT TO MANAGE, DISSOLVE OR PARTITION. No Investor Limited
Partner shall take part in the management, control, conduct or operation of the
Partnership, or have any right, power or authority to act for or bind the
Partnership. No Investor Limited Partner shall have the right to bring an
action for dissolution or partition against the Partnership and each Investor
Limited Partner hereby agrees to indemnify and hold harmless the Partnership and
each other Partner from any loss, liability, cost or expense arising from any
such action brought by it.

6.3 PRIORITY. Except as otherwise specifically provided herein, no
Investor Limited Partner shall have priority over any other Investor Limited
Partner either for the return of Capital Contributions or distributions from, or
allocations of profits, losses or Tax Credits of, the Partnership.

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6.4 DEATH OR DISABILITY OF LIMITED PARTNER. The Partnership shall not be
dissolved by the death, insanity, adjudication of incompetency, bankruptcy,
insolvency or withdrawal of any Investor Limited Partner, by the assignment by
any Investor Limited Partner of its Interest, or by the admission of a
Substituted Investor Limited Partner.

SECTION 7. TRANSFERABILITY OF LIMITED PARTNER INTERESTS

7.1 ASSIGNMENTS.

(a) Except by operation of law, an Investor Limited Partner may not
assign, transfer or otherwise Dispose of all or any part of its Interest without
the prior written consent of the General Partner, the giving or withholding of
which is exclusively within its discretion. In addition, Consent of the Limited
Partners shall be required for any assignment or other Disposition of AMLIC's
Interest (directly or indirectly, including disposition of the beneficial
interest thereof, by stock transfer or otherwise), by AMLIC or any other
Affiliate of the General Partner, except that no such Consent shall be required
for any such Disposition by AMLIC or such Affiliate (i) where the transferee is
an Affiliate of AMLIC and AMLIC remains primarily liable for all of its
obligations under this Agreement including without limitation all obligations
hereunder with respect to the Disposed Interest, (ii) following the expiration
of the Compliance Period for the last of the Properties placed in service,
(iii) where (a) the Disposition is to occur after payment of the Fourth
Installment and the expiration of or performance of the obligations of AMLIC set
forth in Section 5.16, (b) the Disposition will not result in recapture of Tax
Credits from any other Investor Limited Partner, and (c) the Accountants shall
determine, based on a duly authorized officer's certificate of AMLIC, that the
Tax Credits attributable to the Interest to be Disposed of will not reduce
dollar for dollar the Federal income tax liability of AMLIC for its taxable year
in which the Disposition is proposed or any prior or subsequent year in which
such Tax Credit is expected to be available or to which such Tax Credit can be
carried back or forward pursuant to the Code, or (iv) as to which the
Partnership shall receive a legal opinion to the effect that AMLIC is required
to Dispose of such Interest in order to conduct its customary businesses in
compliance with applicable laws and regulations and the Disposition will not
result in recapture of Tax Credits from any other Investor Limited Partner.
Upon the occurrence of any Disposition by AMLIC of its Interest other than a
Disposition with the Consent of the Limited Partners or pursuant to clauses (i)
or (ii) above, the Accountants shall make a projection of Tax Credits and
federal income tax losses allocable to the AMLIC Interest so Disposed (the
"AMLIC Interest") for each year from the date of the Disposition through the end
of the Compliance Period based on all facts and circumstances then known and
income tax laws and regulations then in effect. Thereafter, annually within 30
days after the issuance of Schedule K-1 with respect to the AMLIC Interest for
each year through the year including the end of the Compliance Period, AMLIC
shall pay to Orion and Polar (one-half to each) an amount equal to the excess
(if any) of (a) the cumulative sum of the aforesaid projected Tax Credits and
35% of the aforesaid projected Federal income tax losses over (b) the cumulative
sum of the amounts previously paid pursuant to this sentence, the actual Tax
Credits and 35% of the actual Federal income tax losses attributable to the
AMLIC Interest (actual Tax Credits and actual Tax Losses shall be those as
reported on Schedule K-1 as issued each year by the Partnership), determined in
each case from the Disposition date through the year for which such Schedule K-1
is issued (provided that in no event shall the total of such payments exceed the
amount received by AMLIC in consideration for such Disposition). The provisions
of this Section 7.1(a) shall not apply to transactions permitted or required by
Section 3.10 hereof.

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(b) An assignee of an Investor Limited Partner who does not become a
Substituted Investor Limited Partner in accordance with Section 7.2 shall have
the right to receive the same share of profits, losses, credits and
distributions of the Partnership to which the assigning Investor Limited Partner
would have been entitled if no such assignment had been made by such Investor
Limited Partner.

(c) Any Investor Limited Partner who shall assign all its Interest shall
cease to be an Investor Limited Partner and shall no longer have any rights or
privileges of an Investor Limited Partner except that, unless and until the
assignee of such Investor Limited Partner is admitted to the Partnership as a
Substituted Investor Limited Partner in accordance with Section 7.2, said
assigning Investor Limited Partner shall retain the statutory rights and be
subject to the statutory obligations of an assignor limited partner under the
Uniform Act.

(d) In the event any assignment of an Investor Limited Partner's Interest
as an Investor Limited Partner shall be made, there shall be filed with the
Partnership (and the Partnership need not recognize such assignment until such
filing) a fully and duly executed and acknowledged counterpart of the instrument
making such assignment. Such instrument must evidence the written acceptance by
the assignee of all the terms and provisions hereof. If the General Partner
shall recognize any assignment, such assignment shall be promptly recorded by
the General Partner on the Partnership Register. The General Partner shall
cause the assignor to bear all costs in connection with an assignment consented
to by the General Partner.

(e) An assignee of an Investor Limited Partner's interest as an Investor
Limited Partner who does not become a Substituted Limited Partner as provided
aforesaid and who desires to make a further assignment or other Disposition of
such interest shall be subject to all the provisions of this Section 7 to the
same extent and in the same manner as any Investor Limited Partner desiring to
make an assignment or other Disposition of its Interest.

7.2 SUBSTITUTED INVESTOR LIMITED PARTNERS. No Investor Limited Partner
shall have the right to substitute an assignee as an Investor Limited Partner in
its place without the consent of the General Partner, which consent is solely
within its discretion. The consent of the General Partner to an assignment of
an Investor Limited Partner Interest under Section 7.l shall not, in and of
itself, constitute consent under this Section 7.2. Each Substituted Investor
Limited Partner shall execute such instruments as shall be required by the
General Partner in its sole and absolute discretion to signify the agreement of
such Substituted Investor Limited Partner to be bound by all the provisions of
this Agreement and shall pay the Partnership's reasonable legal fees and filing
costs in connection with its substitution as an Investor Limited Partner. Any
substitutions of Investor Limited Partners permitted by the General Partner
shall promptly be recorded in the Partnership Register.

7.3 RESTRICTIONS; ADDITIONAL LIMITED PARTNERS.

(a) Except for a Disposition made pursuant to Section 3.10, no Disposition
may be made if the Interest sought to be Disposed of when added to the total of
all other Interests Disposed of within the period of twelve consecutive months
prior to the proposed date of Disposition could, in the opinion of Tax Counsel,
result in the termination of the Partnership under Section 708 of the Code.

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(b) In no event shall all or any part of an Investor Limited Partner
Interest be Disposed of to a minor or to an incompetent.

(c) The General Partner may in its sole and absolute discretion, in
addition to any other requirement it may impose, require as a condition of
Disposition that the transferor (i) assume all costs incurred by the Partnership
in connection therewith, including, without limitation, fees and expenses of Tax
Counsel or other professionals retained by the Partnership and (ii) furnish the
Partnership with a satisfactory opinion of counsel that such Disposition
complies with applicable Federal and state securities laws.

(d) No Disposition shall be made if, in the opinion of Tax Counsel, such
Disposition would cause the Partnership to become a "publicly-traded
partnership" for Federal income tax purposes and such result would have
materially adverse Federal income tax consequences for any Partner.

(e) Any Disposition in contravention of any of the provisions of this
Section 7.3 shall be void and ineffectual and shall not bind or be recognized by
the Partnership.

(f) No person may be admitted as an additional limited partner of the
Partnership without the consent of each Investor Limited Partner. Any such
additional limited partner shall, by its execution of this Agreement and as a
condition of receiving any interest in the Partnership, agree to be bound by the
terms of this Agreement. Upon the admission of any additional limited partner,
an amendment to the Certificate, reflecting such admission, shall be filed with
the appropriate governmental authorities if required by the Uniform Act or the
laws of the State of Iowa and Florida. If and to the extent required by the
terms of the Uniform Act or such other laws, such amendment shall amend
Schedule A hereof to reflect the names, addresses and Capital Contributions of
such additional limited partner, and shall set forth the agreement of such
additional limited partner to be bound by all the provisions of this Agreement.
The parties acknowledge that any transferee of all or a portion of the Interest
of AMLIC pursuant to a Disposition where no Consent of the Limited Partners is
required pursuant to Section 7.1(a) which is to be admitted to the Partnership
as a limited partner shall be admitted as a substitute limited partner subject
to compliance with all requirements for admission as such under this Agreement
(including without limitation the requirements set forth in Section 7.2), but
such admission shall not require the consent of each Investor Limited Partner
set forth in the first sentence of this Section 7.3(f).

SECTION 8. WITHDRAWAL OF A GENERAL PARTNER; DISPOSITION OF A GENERAL
PARTNER'S INTEREST

8.1 TRANSFER AND WITHDRAWAL. The General Partner may not voluntarily
Withdraw from the Partnership or transfer all or any part of its Interest in the
Partnership without the Consent of the Limited Partners. However, without the
Consent of the Limited Partners, the General Partner may assign or transfer a
portion of its Interest to an Affiliate provided that the General Partner
maintains at least a 1% Interest in the Partnership or GrA Partners Joint
Venture may dissolve and the partners or joint venturers thereof be admitted as
General Partners hereunder in accordance with the proviso in the definition of
"Withdrawal" in Section 2.1 hereof.

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8.2 OBLIGATION TO CONTINUE. Upon the Withdrawal of a General Partner or
upon the dissolution of GrA Partners Joint Venture and the admission as General
Partners hereunder of the partners or joint venturers thereof in accordance with
the proviso in the definition of "Withdrawal" in Section 2.1 hereof, any
remaining General Partner shall have the right and obligation to continue the
business of the Partnership and shall, within two business days, notify the
Limited Partners of such Withdrawal.

8.3 WITHDRAWAL OF ALL GENERAL PARTNERS. If, following the Withdrawal of a
General Partner, there is no remaining General Partner, the Limited Partners may
elect to continue the Partnership and continue the business of the Partnership
for the balance of its term by selecting a successor General Partner within 90
days after the Withdrawal of the last serving General Partner. If the Limited
Partners so elect and admit the successor General Partner, the relationship
among the then Partners shall be governed by this Agreement.

8.4 INTEREST OF GENERAL PARTNER AFTER REMOVAL OR WITHDRAWAL. In the event
of the Withdrawal of a General Partner or removal of a General Partner pursuant
to Section 3.8, the Withdrawing General Partner hereby covenants and agrees to
transfer to any remaining General Partner(s) or to a successor General Partner
selected in accordance with Section 8.3, as the case may be, the Withdrawing
General Partner's entire Interest without consideration of any kind. The
transfer of the Withdrawing General Partner's Interest in accordance with the
provisions of this Section 8.4 shall, for the purposes of Section 4, be deemed
to be effective immediately prior to the effectiveness of such Withdrawal, but
the Partnership shall not make any distributions to the designated transferee
until the transfer has been made.

8.5 ADDITIONAL GENERAL PARTNERS. The General Partner shall have the right
to designate one or more Persons as additional General Partners. Notice of any
such designation shall be promptly given to all the other Partners. Any such
designation shall be subject to the Consent of the Limited Partners. Subject to
Section 8.1, the General Partner shall assign to such Persons such portion of
their Interests as may be agreed upon by the General Partner and such Persons.

SECTION 9. BOOKS AND RECORDS, ACCOUNTING, TAX ELECTIONS, ETC.

9.1 BOOKS AND RECORDS. The General Partner shall cause the Partnership to
maintain all books of account of the Partnership, in which shall be entered,
fully and accurately, each and every transaction of the Partnership and all
other books and records which are required under the Uniform Act or by any
governmental agencies having jurisdiction over the Partnership and may maintain
such other books and records as the General Partner in its exclusive discretion
deems advisable. The Partnership will also maintain the Partnership Register in
accordance with this Agreement. The books of account and all other books and
records, including the Partnership Register, shall be available for examination
by any Partner, or its duly authorized representatives, at the principal office
of the Partnership at any and all reasonable times.

The Partnership will also obtain the books and records of any Intermediate
Partnership and have them available for examination by any Partner, or its duly
authorized representatives, at the request of any Partner.

9.2 BANK ACCOUNTS. The bank accounts of the Partnership shall be
maintained with such financial institutions, and withdrawals shall be made on
such signature(s), as the General Partner

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may determine in its reasonable discretion. All deposits and other funds not
needed in the operation of the business shall be deposited in interest-bearing
bank accounts or invested in Temporary Investments maturing within one year.

9.3 FISCAL AND TAX YEAR. The fiscal year of the Partnership shall end on
December 31 of each year or as otherwise required by the Code. The tax year of
the Partnership shall be the calendar year or as otherwise required by the Code.

9.4 ACCRUAL BASIS. The books of the Partnership shall be kept on the
accrual basis.

9.5 ACCOUNTANTS; FILING OF RETURNS. The Accountants shall prepare, for
execution by the General Partner, all tax returns, reports and statements of the
Partnership and shall prepare or review all annual financial reports to the
Partners to the extent provided in Section 9.8(a). All such tax returns,
reports and statements which must be filed on behalf of the Partnership and
those to be filed on behalf of the Intermediate Partnerships and (to the extent
permitted under the applicable Operating Partnership Agreement) the Operating
Partnerships with any taxing governmental authority shall be submitted, or
caused to be submitted, by the General Partner to the Investor Limited Partners,
and not before thirty days thereafter (and not without consultation with the
Investor Limited Partners if the Tax Credits, income, losses and depreciation
claimed on such tax return and allocated to the Investor Limited Partners
deviate from the amounts shown in the Initial Projections, or, after then in
effect, the Final Projections), the General Partner shall make or consent to the
timely filing thereof. The General Partner shall cause the Partnership to pay
any taxes payable by the Partnership.

9.6 FEDERAL INCOME TAX ELECTIONS. Subject to Section 9.7, all elections
required or permitted to be made by the Partnership under the Code shall be made
by the General Partner in such manner as will be, in the opinion of the General
Partner in its sole and absolute discretion, most advantageous to a majority in
Interest of the Investor Limited Partners.

9.7 SPECIAL BASIS ADJUSTMENTS. In the event of a transfer of all or any
part of the Interest of any Partner for a consideration in excess of the
adjusted basis of such Interest for Federal income tax purposes, the transferor
may, in its sole and absolute discretion, cause the Partnership to (i) elect
pursuant to Section 754 of the Code to adjust the basis of the Partnership
property and (ii) to the extent so permitted under the applicable partnership
agreement, cause the Intermediate Partnership and the Operating Partnership to
make corresponding elections. Any adjustments made pursuant to said Section 754
and all expenses related thereto shall affect and be borne by only the successor
in Interest to the transferring Partner. Each Partner will furnish the
Partnership all information necessary to give effect to such election.

9.8 INFORMATION TO PARTNERS.

(a) The General Partner shall cause the Partnership to deliver to all
Persons who were Partners at any time during the tax year, no later than 90 days
after the end of each tax year, all data and information regarding the business
of the Partnership as may be necessary for the Partnership and each such Partner
to prepare its federal, state and local tax returns. Without limiting the
foregoing, the General Partner will provide (or cause to be provided) to each of
the Partners an actual Schedule K-1 or its best estimate Schedule K-1 for each
of the Partnership, each Intermediate Partnership and each Operating Partnership
no later than 90 days after the end

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of each tax year and, in all events, will provide (or cause to be provided) to
each of the Partners an actual Schedule K-1 for each of the Partnership, each
Intermediate Partnership and each Operating Partnership by June 30 of each year.
In addition, no later than 90 days after the end of each fiscal year, the
General Partner shall cause the Partnership to deliver to all Partners, (i) a
financial report of the Partnership, each Intermediate Partnership and each
Operating Partnership for each such Entity's prior fiscal year, including a
balance sheet and statements of profit and loss, Partners' equity and cash flow,
which balance sheet and statements shall be prepared by the Accountants in
accordance with generally accepted accounting principles; (ii) a descriptive
statement of all transactions during the fiscal year between or among the
General Partner or Affiliate thereof, the Partnership, any Intermediate
Partnership or any Operating Partnership, including the nature of the
transaction and the payments involved (including accrued cash or other
payments); and (iii) a report on the activities of the Partnership and each of
the Intermediate Partnerships and the Operating Partnerships during the fiscal
year. The books of the Partnership shall be examined in accordance with
generally accepted auditing standards annually as of the end of each fiscal year
of the Partnership by the Accountants. The financial statements of the
Partnership shall be accompanied by the opinion of the Accountants that the
balance sheet and financial statements prepared by the Accountants have been
prepared in accordance with generally accepted accounting principles applied
consistently with prior periods, identifying any matters to which the
Accountants take exception and stating, to the extent practicable, the effect of
each such exception on such financial statements. Upon the written request of
any Investor Limited Partner for further information with respect to any matter
covered above, the Partnership shall furnish such information within 30 days of
receipt of such request to the extent the Partnership possesses such information
or may obtain it without unreasonable effort or expense.

(b) Prior to December 1 of each taxable year, the Partnership shall send
to all Partners an estimate of each Partner's share of the Tax Credits, profits
and losses of the Partnership for Federal income tax purposes for the current
tax year. The General Partner shall from time to time submit to the Partners
such other written reports and information regarding the operations of the
Partnership as may be required by any Investor Limited Partner to satisfy its
reporting requirements or any governmental authorities.

(c) Within sixty (60) days after the end of each calendar quarter, the
General Partner will cause the Partnership to prepare and distribute (or cause
to be prepared and distributed) to each of the Partners copies of quarterly
operating statements for the Partnership, each Intermediate Partnership and each
Operating Partnership.

(d) No cause of action shall accrue to any Investor Limited Partner if the
General Partner shall have acted in good faith and without negligence or
misconduct in attempting to satisfy the requirements of this Section 9.8.

SECTION 10. POWER OF ATTORNEY

10.1 POWER OF ATTORNEY. Each Investor Limited Partner hereby irrevocably
constitutes and appoints the General Partner, each person acting from time to
time as a general partner of the General Partner (each of such Persons
hereinafter referred to as the "Attorney"), and each of them acting singly, with
full power of substitution, the true and lawful attorney-in-fact of such
Investor Limited Partner, with full power and authority to act in its name,
place and stead, to

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make, execute, sign, acknowledge, swear to, verify, deliver, file, record and
publish the following documents:

(a) any certificate, instrument or document which the General Partner
believes is necessary or appropriate to be filed by the Partnership under the
laws of any state or by any governmental agency including, without limitation,
for purposes of qualifying the Partnership to do business in a state in which
any Intermediate Partnership is doing business or to protect the limited
liability of the Investor Limited Partners;

(b) any certificate, instrument or document which may be required to
effect the continuation of the Partnership, the Withdrawal of the Original
Limited Partner or of an Investor Limited Partner, the admission of an Investor
Limited Partner or the dissolution and termination of the Partnership, provided
such continuation, admission, dissolution and termination is in accordance with
the terms of this Agreement;

(c) any document necessary or appropriate for the Disposition of, or
suspension of benefits with respect to, a Defaulted Interest in accordance with
Section 3.5; and

(d) any amendment to this Agreement made in accordance with Section 11.2.

With respect to the exercise of any of the foregoing powers and authority
which may involve a ratification or consent required by the Uniform Act, each
Investor Limited Partner, by its execution hereof, acknowledges that once the
provisions of this Agreement providing for the Consent of the Limited Partners
with respect to such action have been complied with, the Attorney's foregoing
power and authority to act for such Investor Limited Partner in respect of such
action shall be effective notwithstanding that such Investor Limited Partner may
not have specifically consented to such action when the General Partner sought
the Consent of the Limited Partners for such action.

10.2 DURATION OF POWER OF ATTORNEY. It is expressly intended by each of
the Investor Limited Partners and the General Partner that the power of attorney
granted under Section 10.1 (the "Power of Attorney") is coupled with an
interest, and it is agreed that the Power of Attorney shall survive (a) the
death, incompetency, dissolution or merger of any Investor Limited Partner or
Attorney and (b) the assignment by any Investor Limited Partner of the whole or
any portion of its Interest, except that, where the transferee of the Interest
has been approved by the General Partner for admission to the Partnership as a
Substituted Investor Limited Partner, the Power of Attorney shall survive such
transfer for the sole purpose of enabling the Attorney to execute, acknowledge
and file any instrument or document necessary to effect such substitution.

SECTION 11. MISCELLANEOUS

11.1 NOTICES. Notices to the Partnership shall be sent to the principal
office of the Partnership and to the General Partner by certified mail, return
receipt requested. Notices to a Partner shall be sent to its address as set
forth on the Partnership Register. Any Partner may require notices to be sent
to a different address by giving notice to the Partnership in accordance with
this Section 11.1. Any notice or other communication to an Investor Limited
Partner required or permitted hereunder shall be in writing, and shall be deemed
to have been given (unless otherwise specified in this Agreement) if and when
delivered personally, sent by nationally

Page 48 of 55

<PAGE>

recognized overnight courier service and evidenced by a receipt therefor or
mailed first class, postage prepaid, by certified mail, return receipt
requested, to such Investor Limited Partner at such address.

11.2 AMENDMENTS. This Agreement may not be amended or modified except by
the General Partner with the Consent of the Limited Partners which Consent may
be withheld in their sole discretion; provided, however, that all the Investor
Limited Partners shall have given their consent in writing to any amendment
which would (i) extend the term of the Partnership or (ii) amend this
Section 11.2, and any Investor Limited Partner adversely affected thereby shall
have given its consent to any amendment which would (x) increase the amount of
Capital Contributions payable by such Investor Limited Partner or accelerate the
date certain for payment of the Installments set forth in Section 3.3(a)(2)(A),
3.3(a)(3)(A) and Section 3.3(a)(4), (y) increase the liability of such Investor
Limited Partner or (z) reduce such Investor Limited Partner's share of profits,
losses, Tax Credits or distributions;

11.3 TIME OF ADMISSION. Each Investor Limited Partner shall be deemed to
have been admitted to the Partnership as of the first day of the month in which
it becomes an Investor Limited Partner for all purposes of this Agreement,
including Section 4; provided, however, that if regulations are issued or an
amendment to the Code is adopted which would require, in the opinion of the
Accountants, that an Investor Limited Partner be deemed admitted on a date other
than as of the first day of such month, then the General Partner shall select a
permitted admission date which is most favorable to such Investor Limited
Partner.

11.4 ENTIRE AGREEMENT. This Agreement and the Subscription Agreement
constitute the entire agreement among the parties and supersede any prior
agreement or understanding among them with respect to the subject matter hereof
and thereof.

11.5 HEADINGS. All article and section headings in this Agreement are for
convenience of reference only and are not intended to, and shall not, modify or
control the meaning of this Agreement as set forth in the text of any article or
section hereof.

11.6 SEPARABILITY PROVISION. If the operation of any provision of this
Agreement would contravene the mandatory provisions of the Uniform Act, result
in the imposition of general liability on any Investor Limited Partner or cause
any Investor Limited Partner to be bound by the obligations of the Partnership
under the laws of the State, as the same may now or hereafter exist, such
provision shall be void and ineffectual. If any provision of this Agreement or
the application of such provision to any Person or circumstance shall be held
invalid or contrary to any existing or future law, the remainder of this
Agreement, or the application of such provision to a Person or circumstance
other than those as to which it is held invalid, shall not be affected thereby.

11.7 PRONOUNS AND PLURALS. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter as the identity of the
Person or Persons may require. Where the context admits, the singular forms of
terms used herein shall include the plural and the plural shall include the
singular.

11.8 BINDING AGREEMENT. This Agreement and the covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the parties
hereto, their

Page 49 of 55

<PAGE>

successors, heirs, legatees, devisees, assigns, legal representatives, executors
and administrators, except as otherwise provided herein.

11.9 COUNTERPARTS; EXECUTION. This Agreement may be executed in several
counterparts, and all so executed shall constitute one agreement, binding on all
the parties hereto. A Person may be admitted as an Investor Limited Partner and
become bound by this Agreement if such Person (or a representative authorized by
such Person in writing) executes this Agreement or any other writing evidencing
the intent of such Person to become an Investor Limited Partner and complies
with the conditions for becoming an Investor Limited Partner as set forth in
this Agreement. Upon acceptance by the General Partner, each such Investor
Limited Partner, including any Substituted Investor Limited Partner, additional
General Partner, or successor General Partner, as the case may be, shall be
deemed to have adopted, and to have agreed to be bound by, all the provisions of
this Agreement.

11.10 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State.

11.11 DELIVERY OF CERTIFICATE AND AMENDMENTS. Promptly upon the filing
of the Certificate and each amendment thereto in the Filing Office and promptly
upon the complete execution of any amendments to this Agreement, the General
Partner shall deliver or mail a true, correct and complete copy thereof to each
Investor Limited Partner.

11.12 CONFIDENTIALITY. Notwithstanding anything to the contrary
contained in this Agreement, each of the parties hereto agrees, and each
successor or assign thereof and each person that shall become a Partner after
the Initial Funding Date, by becoming a party to this Agreement, shall be deemed
to have agreed (a) that it will not issue or release for publication any article
or advertising or publicity matter relating to or otherwise disclose the
transactions contemplated herein or in the other Operative Documents and
mentioning the identity of any Investor Limited Partner or any of its Affiliates
without the prior written consent of such Investor Limited Partner and (b) that
the terms and conditions of this Agreement, the Subscription Agreements, the
Initial Projections and such other projections contemplated under this Agreement
will, except to the extent required to be disclosed to or filed with any
governmental authority pursuant to applicable legal requirements, be maintained
in strictest confidence and shall not be disclosed or disseminated to any other
Person other than (i) to any prospective successors, assign or new Partner which
has agreed with such party or the Partnership that, upon disclosure of such
terms and conditions, such prospective successor, assign or new Partner shall be
deemed to be bound by the terms of this Section 11.12, whether or not such
Person becomes a party hereto and (ii) to attorneys, accountants and financial,
insurance and other independent advisors of any such party who have been
similarly advised of the provisions of this Section 11.12.

Page 50 of 55

<PAGE>

IN WITNESS WHEREOF, each of the parties hereto has executed and sworn to
this Agreement as of the 1st day of September, 1995.

GENERAL PARTNER: ORIGINAL LIMITED PARTNER:
- ---------------- -------------------------

GrA PARTNERS JOINT VENTURE, AMERUS PROPERTIES, INC.

By: AmerUs Properties, Inc., a By:/s/Gene C. Harris
joint venturer --------------------------------
Gene C. Harris, Vice President

By:/s/Gene C. Harris
----------------------
Gene C. Harris, Vice
President

By: AGGR Central Services, L.L.C.

By:/s/Kenneth M. Robins
--------------------
Kenneth M. Robins,
attorney in fact for
Robert S. Grimes, Manager

INVESTOR LIMITED PARTNERS:

AMERICAN MUTUAL LIFE INSURANCE
COMPANY

By: /s/ Diane M. Davidson
--------------------------------
Name: Diane M. Davidson
------------------------------
Title: Assistant Secretary
-----------------------------

NCC ORION COMPANY

By:/s/Richard E. Lucey
--------------------------------
Name:Richard E. Lucey
------------------------------
Title:President
-----------------------------

Page 51 of 55

<PAGE>

NCC POLAR COMPANY

By: /s/ Richard E. Lucey
---------------------------
Name: Richard E. Lucey
---------------------------
Title: President
---------------------------

The undersigned hereby executes this Agreement below to acknowledge and
confirm its obligations pursuant to Sections 5.9(b), 5.13(b), 5.16 and 7.1
hereof.

AMERICAN MUTUAL LIFE INSURANCE COMPANY

By:/s/Diane M. Davidson
---------------------------
Name:Diane M. Davidson
-------------------------
Title:Assistant Secretary
------------------------

ATTACHMENTS
- -----------

Schedule A Partner's Names, Addresses and Capital Contributions

Exhibit A Initial Projections
Exhibit B Legal Descriptions of Property Sites
Exhibit C Title Insurance Requirements

Page 52 of 55

<PAGE>

AMERICAN MUTUAL AFFORDABLE HOUSING PARTNERS, L.P.

Schedule A - Names, Addresses and Capital Contributions
--------------------------------------------------------

General Partner Capital Contribution
- --------------- --------------------

GrA Partners Joint Venture $100
c/o AmerUs Properties, Inc.
6000 Westown Parkway
West Des Moines, IA 50266

PERCENTAGE INTEREST IN
TOTAL AGREED-TO PAID-IN PROFITS, LOSSES AND DIS-
INVESTOR CAPITAL CAPITAL TRIBUTIONS ALLOCABLE TO THE
LIMITED PARTNERS CONTRIBUTION CONTRIBUTION INVESTOR LIMITED PARTNERS
- ----------------- --------------- -------------- ----------------------------

<S> <C> <C> <C>
American Mutual Life Insurance $ 2,160,000 $ 248,000 9.747292%
Company
6000 Westown Parkway
West Des Moines, IA 50266

NCC Polar Company $10,000,000 $1,150,000 45.126354%
200 Park Avenue
New York, NY 10166

NCC Orion Company $10,000,000 $1,150,000 45.126354%
200 Park Avenue
New York, NY 10166

</TABLE>

Page 53 of 55

<PAGE>

EXHIBIT C
----------

TITLE INSURANCE REQUIREMENTS FOR INVESTMENTS IN
LOW-INCOME HOUSING TAX CREDIT HOUSING PROJECT

A. REQUIREMENTS RELATING TO THE TITLE INSURANCE COMPANY:

The fee simple interest of the Partnership which owns the Property must be
insured by an acceptable title insurance policy issued by a title insurance
company which has the financial strength to pay any claims made under the
policy. The General Partner will have the right, in their sole discretion, to
approve the primary title insurance company and any reinsurer insurance company
involved in the issuance of the title policy. The General Partner will require
compliance with the following requirements with respect to the title insurance
company and any reinsurer:

1. The maximum single risk by any single title insurer may not exceed
25% of that company's capital, surplus, and statutory reserves. Excess
amounts may be covered by appropriate reinsurance arrangements, with direct
access, with other acceptable title insurance companies.

2. Each title insurer and reinsurer must be authorized to do business
in all jurisdiction where the Property is located.

B. REQUIREMENTS RELATING TO THE TITLE INSURANCE POLICY:

In addition, the title policy must insure the Partnership's fee simple
interest in the Property and must be acceptable to the General Partner in its
sole discretion. The General Partner will require compliance with the following
requirements with respect to the title insurance policy for the Property:

1. The amount of the title insurance policy must equal the original
principal amount of the total capital contributions made, or which are
anticipated to be made, by any partner of the Partnership, any grants made
in connection with the Property, and the higher of: (a) the aggregate debt
with respect to the construction of the Property and which is secured, or
to be secured, in whole or in part, by the Property; or (b) the aggregate
of any permanent financing anticipated to be obtained in connection with
the Property and secured, in whole or in part, by the Property.

2. Schedule A of the policy must name as the insured the Partnership
as constituted as of the date of the issuance of the policy and as may be
reconstituted from time to time, must insure that the Property is owned
solely by the Partnership, and must insure that the Partnership's interest
in the Property is fee simple absolute.

3. The title policy must be written on the current standard American
Land Title Association (ALTA) owner's policy form or a similar form
approved by the General Partner. In those states in which ALTA forms of
coverage are not used or are unacceptable the policy shall provide similar
coverage.

4. The policy should insure against the standard exceptions (E.G.,)
parties in possession or other matters not shown on public records).

Page 54 of 55

<PAGE>

5. The effective date of the title policy (and time, where
available) must be as of the date of the Permanent Mortgage Closing.

6. The legal description of each Property in the title policy must
conform to that shown on the survey of each Property.

7. If Schedule B-1 of the policy indicates the presence of any
easements that are not specifically located on the survey and identified by
recording information, the title policy must provide affirmative insurance
against any loss that conflicts with the use or diminishes the value of the
improvements resulting from the exercise by the holder of such easement or
its right to use or maintain that easement.

8. If the title insurance policy includes any exception for taxes,
assessments or other lienable items, it must insure that such taxes,
assessments or items are not yet delinquent.

9. The title policy shall include such other endorsements and
affirmative coverages as are customarily obtained in real estate
transactions, including, without limitation, a single tax lot endorsement,
an ALTA 3.1 zoning endorsement, an access (to a named public highway)
endorsement, a non-imputation endorsement (except with respect to
properties located in the State of Florida) and "Fairway" endorsement.

10. The Investor Limited Partners shall each be provided with a
true, correct and complete copy of the title insurance policy meeting the
requirements set forth above when issued.

Page 55 of 55

<PAGE>

Exhibit 10.68

TAX ALLOCATION AND INDEMNIFICATION AGREEMENT

TAX ALLOCATION AND INDEMNIFICATION AGREEMENT (this "Agreement")
dated as of November 4th, 1996, among American Mutual Holding Company
("AMHC"), an Iowa mutual insurance holding company, AmerUs Group Co.
("AmerUs Group"), an Iowa corporation, AmerUs Life Holdings, Inc. ("ALH"), an
Iowa corporation, AmerUs Life Insurance Company ("AmerUs Life"), an Iowa life
insurance company, AmerUs Bank ("AmerUs Bank"), a federal savings bank, Iowa
Realty Co., Inc. ("Iowa Realty"), an Iowa corporation, and AmerUs Properties,
Inc. ("AmerUs Properties"), an Iowa corporation, on behalf of themselves and
their wholly-owned subsidiaries:

WHEREAS, the parties to this Agreement are currently members
("Members") of an affiliated group (the "Group") within the meaning of
Section 1504(a) of the Internal Revenue Code of 1986 (the "Code"), of which
AMHC has been the common parent since June 30, 1996;

WHEREAS, AMERUS LIFE, as the predecessor common parent of the
Group, has filed consolidated federal income tax returns ("Group Tax
Returns") and other tax returns on behalf of the Group for certain periods
ending prior to June 30, 1996;

WHEREAS, AMHC has filed or will file Group Tax Returns and other
tax returns on behalf of the Group for certain periods relevant hereto;

WHEREAS, as a result of the proposed distribution by AmerUs Life of
the stock of its non-life insurance subsidiaries to AmerUs Group, the
non-life insurance subsidiaries will cease to be subsidiaries of AmerUs Life
but continue to be Members of the Group;

WHEREAS, as a result of the subsequent proposed initial public
offering of Class A Common Stock of ALH, ALH and its subsidiaries ("ALH and
Subsidiaries"), including AmerUs Life and its remaining subsidiaries, will
cease to be Members of the Group;

WHEREAS, Members of the Group may be subject to state income and
franchise tax liabilities on a combined or consolidated basis for periods
both before and after the proposed initial public offering; and

WHEREAS, AMHC and ALH desire to set forth their rights and
obligations with respect to certain tax liabilities.

NOW THEREFORE, in consideration of the mutual promises and
covenants contained herein, the parties agree as follows:

1. APPLICABLE PERIOD; TAX PERIOD. For purposes of this
Agreement, the term "Applicable Period" shall refer to the period January 1,
1996 through the date on which ALH and Subsidiaries cease to be Members of
the Group. The term "Tax Period" shall refer to all taxable periods
beginning or ending in the Applicable Period.

2. COOPERATION IN FILING RETURNS. AMHC shall be responsible for
preparing the Group Tax Returns for each Tax Period and shall prepare those
returns in a manner which fairly

<PAGE>

- 2 -

reflects the interests of ALH and Subsidiaries. ALH and Subsidiaries will
cooperate with AMHC in the preparation and filing of the Group Tax Returns
for each Tax Period, regardless of whether such returns are prepared after
the Applicable Period, and provide such assistance and documents, without
charge, as may reasonably be requested by AMHC for that purpose.

3. GROUP TAX LIABILITY; GROUP AMT LIABILITY. For purposes of
this Agreement, the term "Group Tax Liability" shall mean the consolidated
Federal income tax liability, if any, reported on the Group Tax Return (as
adjusted under Section 8 of this Agreement). For purposes of this Agreement,
the term "Group AMT Liability" shall mean the alternative minimum tax
liability under Section 55 of the Code, if any, reported on the Group Tax
Return (as adjusted under Section 8 of this Agreement).

4. ALLOCATION OF GROUP TAX LIABILITY TO ALH AND SUBSIDIARIES.
The Group Tax Liability for each Tax Period shall be allocated among the
Members as provided in this Section 4.

a. The separate Federal income tax liability of each Member
with Federal income tax liability for each Tax Period shall first be
ascertained under the applicable provisions of the Code and the Consolidated
Return Regulations. Any gain or loss (including a gain or loss attributable
to a corporate restructuring) that is treated as recognized by one or more
members of an affiliated group under the Internal Revenue Code and
regulations shall be treated as attributable to that member for purposes of
this Agreement. In computing the Federal income tax liability of each Member
(a "Profit Member"), the surtax exemption to which the Group as a whole is
entitled shall be apportioned among the Profit Members in proportion to their
respective separate taxable incomes.

b. The separate Federal income tax liabilities of all of the
Profit Members computed under Section 4(a) for each Tax Period shall then be
aggregated into a single sum.

c. Each Profit Member shall then be allocated a portion of
the Group Tax Liability, if any, for each Tax Period equal to the product of
(i) the Group Tax Liability for such Tax Period and (ii) a fraction, the
numerator of which is the separate Federal income tax liability of such
Profit Member for such Tax Period determined under Section 4(a) and the
denominator of which is the aggregate sum for such Tax Period determined
under Section 4(b).

d. Notwithstanding the foregoing provisions of this Section
4, the amount of the Group Tax Liability for any Tax Period allocated to any
Member shall not exceed the excess of

<PAGE>

- 3 -

(i) the total of the Federal income tax liabilities of such Member computed
under Section 4(a) for all Tax Periods (including the Tax Period under
consideration and taking into account any loss and credit carryovers that
such Member would have been entitled to had it filed on a separate return
basis), over (ii) the total of the portions of the Group Tax Liabilities
allocated to such Member for all previous Tax Periods. Any excess tax
liability resulting from the foregoing limitation shall be reallocated among
the other Members in accordance with Section 1.1502-33(d)(2)(i)(b) of the
Consolidated Return Regulations.

e. The portion of the Group Tax Liability allocated in the
manner described in this Section 4 to ALH and Subsidiaries shall be a joint
and several liability of each of ALH and Subsidiaries to AMHC.

5. ALLOCATION OF GROUP AMT LIABILITY TO ALH AND ITS SUBSIDIARIES.
If the Group should incur any Group AMT Liability for any Tax Period:

a. The separate alternative minimum taxable income of each
Member with positive separate alternative minimum taxable income (an "AMT
Member") shall be computed under Section 55(b)(2) of the Code;

b. The exemption amount under Section 55(d)(2) of the Code
(as adjusted under Section 55(d)(3)(A) of the Code) shall be apportioned
among the AMT Members in proportion to their respective separate alternative
minimum taxable incomes;

c. The amount allocated to each AMT Member in Section 5(a)
shall be reduced by the amount, if any, allocated to such AMT Member under
Section 5(b) (the resulting amount referred to as the "AMT Base Amount");

d. The separate AMT Base Amounts of each AMT Member shall be
aggregated into a single total; and

e. Each AMT Member shall then be allocated a portion of the
Group AMT Liability for each Tax Period equal to the product of (i) such
Group AMT Liability and (ii) a fraction, the numerator of which is the AMT
Base Amount allocated to such AMT Members under Section 5(c) and the
denominator of which is the aggregate sum determined under Section 5(d).

f. Notwithstanding the foregoing provisions of this Section
5, the amount of the Group AMT Liability for any Tax Period allocated to any
Member shall not exceed the excess of (i) the total of the alternative
minimum tax liabilities of such

<PAGE>

- 4 -

Member computed in accordance with Section 5(a) for all Tax Periods (including
the Tax Period under consideration and taking into account any loss and credit
carryovers that such Member would have been entitled to had it filed on a
separate return basis), over (ii) the total of the portions of the Group Tax
Liabilities allocated to such Member for all previous Tax Periods. Any excess
alternative minimum tax liability resulting from the foregoing limitation shall
be reallocated among the other Members in accordance with Section 1.1502-33 (d)
(2) (i) (b) of the Consolidated Return Regulations.

g. The portion of the Group AMT Liability allocated in the manner
described in this Section 5 to ALH and Subsidiaries shall be a joint and several
liability of each of ALH and Subsidiaries to AMHC.

6. PAYMENT OF ALLOCABLE TAX LIABILITY. Section 4 and Section 5 are
intended to allocate liability for the payment of the Group Tax Liability and
any Group AMT Liability for each Tax Period to ALH and Subsidiaries in
proportion to their respective contributions to such liabilities. The amounts
allocated in this manner shall be a joint and several liability of ALH and
Subsidiaries enforceable by AMHC and the other Members of the Group under the
terms of this Agreement, and requiring ALH and Subsidiaries promptly to transmit
payment in the amount of the allocation to AMHC in a timely manner so that such
payment may be included with the filing of the Group Tax Return for such Tax
Period. ALH and Subsidiaries shall be jointly and severally liable for any
interest or penalties resulting from their failure to tender such payments
timely. Each AMT Member shall be entitled to a portion of any minimum tax
credit computed under Section 53 based on its respective payments of the Group
AMT Liability. Notwithstanding the foregoing, ALH and Subsidiaries shall pay
their allocable share of estimated Federal income taxes (including estimated
alternative minimum taxes) to AMHC in a timely manner so that AMHC may timely
pay required estimated Federal income taxes during each Tax Period. The amount
of any payment for taxes owed by any Profit Member or AMT Member to AMHC shall
be net of any estimated income or alternative minimum taxes, as the case may be,
paid by such Member with respect to the particular Tax Period. AMHC shall
promptly provide ALH with evidence of the timely payment of each Group Tax
Liability, Group AMT Liability and estimated tax liability.

7. PAYMENTS TO LOSS MEMBERS.

a. In addition to the allocations set forth above with respect to
the Group Tax Return for each Tax Period, each Profit Member for such Tax Period
shall also be allocated an amount equal to the difference between (i) the
federal income tax

<PAGE>

- 5 -

liability that would have been due on the Profit Member's separate taxable
income under Section 4(a) if such party had filed a separate tax return for such
Tax Period and (ii) the tax amount allocated to it under Section 4(d) (the
"Additional Allocation").

b. A portion of the Additional Allocation determined under Section
7(a) with respect to each Profit Member shall be a liability of that Profit
Member to each Member generating a net operating loss ("NOL") in the particular
Tax Period (the "Loss Member") in an amount equal to the product of (i) the
Additional Allocation and (ii) a fraction the numerator of which is such Loss
Member's NOL (including NOLs carried forward from prior periods) actually used
in computing the Group Tax Liability and the denominator of which is the total
NOLS of all the Loss Members actually used in computing the Group Tax Liability.

c. The amounts allocated to ALH and Subsidiaries under Sections 7(a)
and 7(b) shall be netted against each other and, (i) to the extent that it
results in a net payment liability, shall be paid by ALH to AMHC, and (ii) to
the extent that it results in a net amount receivable, shall be paid by AMHC to
ALH. The appropriate liability or receivable, as the case may be, shall be paid
within 45 days after the filing of the Group Tax Return for the particular Tax
Period and shall be a joint and several liability of each Profit Member of the
Group or of ALH and Subsidiaries, as the case may be.

8. AUDITS AND OTHER ADJUSTMENTS.

a. If, as a result of any final determination or settlement with the
Internal Revenue Service (the "IRS") or any court decision relating to a Group
Tax Return (for Tax Periods and for taxable periods prior to the Applicable
Period):

(1) each audited Member has an increase in its separate Federal
income tax liability, then each such Member shall be allocated the portion of
the increase in the Group Tax Liability or Group AMT Liability that is
attributable to its respective increased separate Federal income tax liability;

(2) each audited Member has a reduction in its separate Federal
income tax liability, then each such Member shall be allocated the portion of
the refund received by AMHC on behalf of the Group that is attributable to its
respective decreased separate Federal income tax liability; or

(3) some audited Members have increases in, but some audited
Members have reductions in, their respective

<PAGE>

- 6 -

separate Federal income tax liabilities, then each Member with increased tax
liability shall be allocated the increase in its separate return tax liability,
and each Member with reduced tax liability shall be allocated (A) a portion of
any refund received by AMHC on behalf of the Group, together with (B) a portion
of any excess in the increased separate return tax liabilities of the Members
with increased tax liabilities over the increase in the Group Tax Liability or
Group AMT Liability assessed as a result of the final determination, settlement
or other resolution of the audit. The portion of such refund or difference
allocated to each Member with reduced tax liability shall be based on a
fraction, the numerator of which is such Member's reduction in its separate
return tax liability and the denominator of which is the total reduction in
separate return tax liabilities of all Members with reduced tax liabilities.

b. For purposes of this Agreement, the term "Profit Member" shall
include any Member that has separate Federal income tax liability as a result of
such final determination, and the term "AMT Member" shall include any Member
that becomes an AMT Member as a result of such final determination. The amounts
allocated to each member of ALH and Subsidiaries under Section 8(a) shall be
aggregated and netted against each other and, (i) to the extent that this
computation results in a net payment liability, shall be paid by ALH to AMHC,
and (ii) to the extent that it results in a net amount receivable, shall be paid
by AMHC to ALH. The appropriate liability or receivable, as the case may be,
together with any interest or penalties thereon, shall be paid in a timely
fashion and shall be a joint and several liability of each Profit Member of the
Group or of ALH and Subsidiaries, as the case may be. Any additional minimum
tax credit under Section 53 of the Code will be apportioned to the appropriate
Member under Section 6.

9. CONDUCT OF DISPUTES. If AMHC as common parent of the Group receives
notice of any audit of other examination by the IRS of any Group Tax Return,
AMHC shall promptly notify ALH of such audit or examination. AMHC may, at its
option upon timely notice to ALH, control the conduct of any audit and the
defense of any suit, action or proceeding resulting therefrom. AMHC shall
discharge its fiduciary responsibilities to ALH and Subsidiaries by representing
them in a manner which fairly reflects their interests. ALH and Subsidiaries
will cooperate with AMHC in these proceedings and provide such assistance and
documents, without charge, as may reasonably be requested by AMHC for such
purpose.

10. CERTAIN POST-APPLICABLE PERIOD RETURNS. For any taxable year in which
the federal income tax liability of ALH and Subsidiaries is not reported on the
same tax return as that of

<PAGE>

- 7 -

AMHC and its wholly-owned subsidiaries, the person or persons preparing the
returns and representing the taxpayers in any examination or appeal shall do so
in a manner which fairly reflects the interests of all taxpaying entities.

11. STATE AND LOCAL INCOME AND FRANCHISE TAXES.

a. In the case of any taxable year for which a consolidated
income or franchise tax return is filed with any state or local jurisdiction,
which return includes any member of ALH and Subsidiaries, ALH shall pay to AMHC
the proportionate share of any taxes reported on such return, and AMHC shall pay
to ALH the proportionate share of any tax benefits from losses reported on such
return, attributable to ALH and Subsidiaries computed in a manner consistent
with the principles set forth in Sections 4 and 7 of this Agreement. The
principles set forth in Sections 2, 6, 8, 9 and 10 shall also be applicable to
state and local income and franchise tax returns.

b. If the state income or franchise tax liability of AMHC or
any one or more of its direct or indirect subsidiaries (other than ALH and
Subsidiaries) is determined by reference to the income, loss, assets, expenses,
or activities of any member of ALH and Subsidiaries:

(i) ALH shall cause a payment to be made to AMHC equal to
the amount of state tax liability (determined on a with and without basis)
attributable to the income, loss, assets, expenses, or activities of that member
or members of ALH and Subsidiaries;

(ii) AMHC shall cause a payment to be made to ALH equal to
the amount, if any, by which the State income tax liability of AMHC and its
subsidiaries (determined on a with and without basis) is reduced by the income,
loss, assets, or activities of that member or members of ALH and Subsidiaries;
and

(iii) All such computations shall be netted, such that a
payment shall be made to or from ALH only to the extent that the activities of
it and all of its subsidiaries has resulted in a net increase or decrease in the
state income or franchise tax liability of AMHC and all of its subsidiaries.
Such payments shall be adjusted to reflect any examination adjustments or
amended returns consistent with the principles set forth in Section 8.

c. Principles similar to those set forth in Section 11(b) shall
apply if the state income or franchise tax liability of any member of ALH and
Subsidiaries is determined by

<PAGE>

- 8 -

reference to the income, loss, assets, expenses, or activities of AMHC or one or
more of its direct or indirect subsidiaries (other than ALH and Subsidiaries).

d. In the event that the State income or franchise tax
liability of AMHC or one or more of its subsidiaries (other than ALH and
Subsidiaries) is determined with reference to the amount of any dividend or
similar distribution made by ALH with respect to its stock, no payment shall be
made under this agreement.

e. No state income or franchise tax return or report shall be
made on a basis that combines or consolidates the income of any member of ALH
and Subsidiaries with AMHC, or any of its direct or indirect subsidiaries,
unless such combined reporting has been approved by the boards of directors of
both AMHC and ALH or has been determined to be required by the taxing authority
of the state in which such return or report is filed.

12. INDEMNIFICATION. Each party shall pay and be responsible for,
and shall indemnify, defend and hold harmless all other parties to this
Agreement from and against all liabilities allocated to it under this Agreement.
If any party pays or has paid any Group Tax Liability, Group AMT Liability or
state or local income or franchise tax liability for which another party to this
Agreement is or becomes liable pursuant to the terms of this Agreement,
appropriate reimbursement shall be made no later than 10 days after demand
therefore together with interest calculated on such reimbursement at the rate
specified under Section 6621(a)(2) of the Code (the "Underpayment Rate") from
the date such payment is due pursuant to this Agreement to the date of
reimbursement. The portion of any refund, rebate or reimbursement received by
any party to which another party is entitled pursuant to this Agreement shall be
paid over within 10 days to the party which is entitled thereto. Any other
payments required to be made between the parties pursuant to this Agreement
which are not made in a timely fashion shall bear interest at the Underpayment
Rate from the date the payment is due until the date the payment is made.

13. COMPLETE AGREEMENT. This Agreement shall constitute the entire
agreement among the parties with respect to the subject matter hereof and shall
supersede any previous negotiations, commitments and writings with respect to
such subject matter.

14. SUCCESSORS AND ASSIGNS. This Agreement and all of its provisions
hereof shall be binding upon and shall inure to the benefit of the parties and
their respective successors and permitted assigns.

<PAGE>

- 9 -

15. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Iowa, without regard to its
principles of conflicts of law.

16. AMENDMENTS. This Agreement may not be modified or amended except
by an agreement in writing signed by the parties hereto.

IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the 4th day of November, 1996.

Attest AMERICAN MUTUAL HOLDING
COMPANY

By: /s/ James A. Smallenberger By: /s/ Sam C. Kalainov
------------------------------- -------------------------------

Attest AMERUS GROUP CO.

By: /s/ James A. Smallenberger By: /s/ Sam C. Kalainov
------------------------------- -------------------------------

Attest AMERUS LIFE HOLDINGS, INC.

By: /s/ James A. Smallenberger By: /s/ Roger K. Brooks
------------------------------- -------------------------------

Attest AMERUS LIFE INSURANCE
COMPANY

By: /s/ James A. Smallenberger By: /s/ Roger K. Brooks
------------------------------- -------------------------------

Attest AMERUS BANK

By: /s/ Dennis Thompson By: /s/ Marcia S. Hanson
------------------------------- -------------------------------

<PAGE>

- 10 -

Attest IOWA REALTY CO., INC.

By: /s/ Susan M. Boe By: /s/ R. Michael Knapp
------------------------------- -------------------------------

Attest AMERUS PROPERTIES, INC.

By: /s/ Diane M. Davidson By: /s/ William C. Knapp II
------------------------------- -------------------------------

<PAGE>

ASSIGNMENT OF PARTNERSHIP INTEREST
OF
T.L.B. LIMITED PARTNERSHIP

THIS ASSIGNMENT OF PARTNERSHIP INTEREST OF T.L.B. LIMITED PARTNERSHIP is
executed this 28th day of December, 1994, by LARTNEC INVESTMENT CO., an Iowa
corporation, of 611 Fifth Avenue, Des Moines, Iowa 50309 ("LICO") to CENTRAL
PROPERTIES, INC., an Iowa corporation, of 6000 Westown Parkway, Suite 200W, West
Des Moines, Iowa 50266-7711 ("CPI").

W I T N E S S E T H:

WHEREAS, LICO has been a general partner in T.L.B. Limited Partnership,
an Oklahoma limited partnership ("TLB"), under Amended and Restated Articles
of Limited Partnership of T.L.B. Limited Partnership between F. Barry Tapp
("Tapp") holding a twenty-five and eight hundred thirty-five thousandths
percent (25.835%) general partnership interest and LICO holding a sixty-nine
and one hundred sixty-five thousandths percent (69.165%) general partnership
interest, and Michael H. Taylor ("Taylor") holding a five percent (5%)
limited partnership interest and as amended by three (3) Assignments of
Partnership Interest dated effective October 1, 1988, assigning Tapp and
Taylor's partnership interests and nineteen and one hundred sixty-five
thousands percent (19.165%) of LICO's interest to Central Life Assurance
Company ("CLAC") resulting in LICO's fifty percent (50%) general partnership
interest and CLAC's forty-five percent (45%) general partnership and five
percent (5%) limited partnership interest (the "Partnership Agreement");

WHEREAS, LICO desires to transfer ninety-nine and ninety-eight
hundredths percent (99.98%) of LICO's fifty percent (50%) interest in TLB,
which interest is equal to forty-nine and ninety-nine hundredths percent
(49.99%) general partnership interest in TLB, to its wholly owned subsidiary,
CPI pursuant to Section 351 of the Internal Revenue Code of 1986, as amended.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1. CONTRIBUTION OF INTEREST. LICO hereby contributes all of LICO's
right, title and interest to ninety-nine and ninety-eight hundredths
percent (99.98%) of its fifty percent (50%) general partnership
interest in TLB to CPI pursuant to Section 351 of the Internal Revenue
Code of 1986, as amended.

<PAGE>

2. FULL FORCE AND EFFECT. LICO hereby covenants, warrants and represents
that its general partnership interest is in full force and effect and
that LICO has performed all of LICO's obligations under the
Partnership Agreement.

3. ACCEPTANCE. CPI hereby accepts the foregoing assignment of right,
title and interest and hereby assumes and agrees to be bound by and to
fulfill all of the terms, covenants and conditions under the
Partnership Agreement as of the date of this Agreement.

IN WITNESS WHEREOF, the parties have signed this Agreement as of the day
and year first above written.

LARTNEC INVESTMENT CO., CENTRAL PROPERTIES, INC.,
an Iowa corporation an Iowa corporation

By: /s/ Diane M. Davidson By: /s/ William C. Knapp II
--------------------- -----------------------
Diane M. Davidson William C. Knapp II
Assistant Secretary President
2

<PAGE>

ASSIGNMENT OF PARTNERSHIP INTEREST
OF
T.L.B. LIMITED PARTNERSHIP

THIS ASSIGNMENT OF PARTNERSHIP INTEREST OF T.L.B. LIMITED PARTNERSHIP is
executed this 30th day of December, 1995, by AMERICAN MUTUAL LIFE INSURANCE
COMPANY F/K/A CENTRAL LIFE ASSURANCE COMPANY, an Iowa corporation, of 611 Fifth
Avenue, Des Moines, Iowa 50309 ("AML") to AMERUS PROPERTIES, INC., F/K/A CENTRAL
PROPERTIES, INC., an Iowa corporation, of 4949 Westown Parkway, Suite 245, West
Des Moines, Iowa 50266-1066 ("API").

W I T N E S S E T H:

WHEREAS, AML has been a general partner in T.L.B. Limited Partnership, an
Oklahoma limited partnership ("TLB"), under Amended and Restated Articles of
Limited Partnership of T.L.B. Limited Partnership between F. Barry Tapp ("Tapp")
holding a twenty-five and eight hundred thirty-five thousandths percent
(25.835%) general partnership interest and Lartnec Investment Co. ("LICO")
holding a sixty-nine and one hundred sixty-five thousandths percent (69.165%)
general partnership interest, and Michael H. Taylor ("Taylor") holding a five
percent (5%) limited partnership interest, as amended by three (3) Assignments
of Partnership Interest dated effective October 1, 1988, assigning Tapp and
Taylor's partnership interests and nineteen and one hundred sixty-five thousands
percent (19.165%) of LICO's interest to AML, as amended by an Assignment of
Partnership Interest dated as of December 28, 1994 assigning a portion of LICO's
general partnership interest in the amount of forty-nine and ninety-nine
hundredths percent (49.99%) to API and as amended by an Assignment of
Partnership Interest dated as of December 29, 1995 assigning LICO's one
hundredths percent (.01%) general partnership to API resulting in API's fifty
percent (50%) general partnership interest, and AML's forty-five percent (45%)
general partnership and five percent (5%) limited partnership interest (the
"Partnership Agreement");

WHEREAS, AML desires to transfer one hundred percent (100%) of AML's forty-
five percent (45%) interest in TLB, which interest is equal to a forty-five
percent (45%) general partnership interest in TLB, and a portion of AML's five
(5%) limited partnership interest in TLB, which interest is equal to four and
ninety-five hundredths percent (4.95%) limited partnership interest in TLB to
its wholly owned subsidiary, API pursuant to Section 351 of the Internal Revenue
Code of 1986, as amended.

1
<PAGE>

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1. CONTRIBUTION OF INTEREST. AML hereby contributes all of AML's right,
title and interest to one hundred percent (100%) of its forty-five
percent (45%) general partnership interest in TLB and a portion of
AML's five percent (5%) limited partnership interest in TLB, which
interest is equal to four and ninety-five hundredths percent (4.95%)
limited partnership interest in TLB to API pursuant to Section 351 of
the Internal Revenue Code of 1986, as amended.

2. FULL FORCE AND EFFECT. AML hereby covenants, warrants and represents
that its general partnership interest and its limited partnership
interest is in full force and effect and that AML has performed all of
AML's obligations under the Partnership Agreement.

3. ACCEPTANCE. API hereby accepts the foregoing assignment of right,
title and interest and hereby assumes and agrees to be bound by and to
fulfill all of the terms, covenants and conditions under the
Partnership Agreement as of the date of this Agreement.

IN WITNESS WHEREOF, the parties have signed this Agreement as of the day
and year first above written.

AMERICAN MUTUAL LIFE INSURANCE, AMERUS PROPERTIES, INC.,
COMPANY, an Iowa corporation an Iowa corporation

By: /s/ Diane Davidson By: /s/ William C. Knapp II
--------------------- -----------------------
Diane M. Davidson William C. Knapp II
Assistant Secretary President

<PAGE>

ASSIGNMENT OF PARTNERSHIP INTEREST
OF
SOUTH 19TH LIMITED PARTNERSHIP

THIS ASSIGNMENT OF PARTNERSHIP INTEREST OF SOUTH 19TH LIMITED PARTNERSHIP is
executed this 28th day of December, 1994, by LARTNEC INVESTMENT CO., an Iowa
corporation, of 611 Fifth Avenue, Des Moines, Iowa 50309 ("LICO") to CENTRAL
PROPERTIES, INC., an Iowa corporation, of 6000 Westown Parkway, Suite 200W, West
Des Moines, Iowa 50266-7711 ("CPI").

W I T N E S S E T H:

WHEREAS, LICO has been a general partner in South 19th Limited
Partnership, an Oklahoma limited partnership ("So 19"), under Limited
Partnership Agreement of South 19th Limited Partnership dated December 30,
1985, between F. Barry Tapp ("Tapp") holding a twenty-five and eight hundred
thirty-five thousandths percent (25.835%) general partnership interest and LICO
holding a sixty-nine and one hundred sixty-five thousandths percent (69.165%)
general partnership interest, and Michael H. Taylor ("Taylor") holding a five
percent (5%) limited partnership interest and as amended by three (3)
Assignments of Partnership Interest dated effective October 1, 1988,
assigning Tapp and Taylor's partnership interests and nineteen and one
hundred sixty-five thousands percent (19.165%) of LICO's interest to Central
Life Assurance Company ("CLAC") resulting in LICO's fifty percent (50%)
general partnership interest and CLAC's forty-five percent (45%) general
partnership and five percent (5%) limited partnership interest (the
"Partnership Agreement");

WHEREAS, LICO desires to transfer ninety-nine and ninety-eight hundredths
percent (99.98%) of LICO's fifty percent (50%) interest in So 19, which
interest is equal to forty-nine and ninety-nine hundredths percent (49.99%)
general partnership interest in So 19, to its wholly owned subsidiary, CPI
pursuant to Section 351 of the Internal Revenue Code of 1986, as amended.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1. CONTRIBUTION OF INTEREST. LICO hereby contributes all of LICO's
right, title and interest to ninety-nine and ninety-eight hundredths
percent (99.98%) of its fifty percent (50%) general partnership
interest in So 19 to CPI pursuant to Section 351 of the Internal
Revenue Code of 1986, as amended.

<PAGE>

IN WITNESS WHEREOF, the parties have signed this Agreement as of the day
and year first above written.

LARTNEC INVESTMENT CO., CENTRAL PROPERTIES, INC.,
an Iowa corporation an Iowa corporation

By: /s/ Diane M. Davidson By: /s/ William C. Knapp II
--------------------- -----------------------
Diane M. Davidson William C. Knapp II
Assistant Secretary President

2
<PAGE>

ASSIGNMENT OF PARTNERSHIP INTEREST
OF
SOUTH 19TH LIMITED PARTNERSHIP

THIS ASSIGNMENT OF PARTNERSHIP INTEREST OF SOUTH 19TH LIMITED PARTNERSHIP
is executed this 30th day of December, 1995, by AMERICAN MUTUAL LIFE INSURANCE
COMPANY F/K/A CENTRAL LIFE ASSURANCE COMPANY, an Iowa corporation, of 611 Fifth
Avenue, Des Moines, Iowa 50309 ("AML") to AMERUS PROPERTIES, INC., F/K/A CENTRAL
PROPERTIES, INC., an Iowa corporation, of 4949 Westown Parkway, Suite 245, West
Des Moines, Iowa 50266-1066 ("API").

W I T N E S S E T H:

WHEREAS, AML has been a general partner in South 19th Limited Partnership,
an Oklahoma limited partnership ("So 19"), under Limited Partnership Agreement
of South 19th Limited Partnership dated December 30, 1985, between F. Barry Tapp
("Tapp") holding a twenty-five and eight hundred thirty-five thousandths percent
(25.835%) general partnership interest and Lartnec Investment Co. ("LICO")
holding a sixty-nine and one hundred sixty-five thousandths percent (69.165%)
general partnership interest, and Michael H. Taylor ("Taylor") holding a five
percent (5%) limited partnership interest, as amended by three (3) Assignments
of Partnership Interest dated effective October 1, 1988, assigning Tapp and
Taylor's partnership interests and nineteen and one hundred sixty-five thousands
percent (19.165%) of LICO's interest to AML, as amended by an Assignment of
Partnership Interest dated as of December 28, 1994 assigning a portion of LICO's
general partnership interest in the amount of forty-nine and ninety-nine
hundredths percent (49.99%) to API and as amended by an Assignment of
Partnership Interest dated as of December 29, 1995 assigning LICO's one
hundredths percent (.01%) general partnership interest to API resulting in API's
fifty percent (50%) general partnership interest, and AML's forty-five percent
(45%) general partnership and five percent (5%) limited partnership interest
(the "Partnership Agreement");

WHEREAS, AML desires to transfer one hundred percent (100%) of AML's forty-
five percent (45%) general partnership interest in So 19, which interest is
equal to forty-five percent (45%) general partnership interest in So 19, and a
portion of AML's five percent (5%) limited partnership interest in So 19, which
interest is equal to four and ninety-five hundredths percent (4.95%) limited
partnership interest in So 19 to its wholly owned subsidiary, API pursuant to
Section 351 of the Internal Revenue Code of 1986, as amended.

1
<PAGE>

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1. CONTRIBUTION OF INTEREST. AML hereby contributes all of LICO's right,
title and interest to one hundred percent (100%) of its forty-five
percent (45%) general partnership interest in So 19 and a portion of
AML's five percent (5%) limited partnership interest in So 19, which
interest is equal to four and ninety-five hundredths percent (4.95%)
limited partnership interest in So 19 to API pursuant to Section 351
of the Internal Revenue Code of 1986, as amended.

IN WITNESS WHEREOF, the parties have signed this Agreement as of the day
and year first above written.

AMERICAN MUTUAL LIFE INSURANCE AMERUS PROPERTIES, INC.,
COMPANY, an Iowa corporation an Iowa corporation

By: /s/ Diane M. Davidson By: /s/ William C. Knapp II
--------------------- -----------------------
Diane M. Davidson William C. Knapp II
Assistant Secretary President

<PAGE>

ASSIGNMENT OF LIMITED PARTNERSHIP INTEREST
OF
THEATRE PROJECT LIMITED PARTNERSHIP

THIS ASSIGNMENT OF LIMITED PARTNERSHIP INTEREST OF THEATRE PROJECT
LIMITED PARTNERSHIP is executed this 30th day of December, 1995, by AMERICAN
MUTUAL LIFE INSURANCE COMPANY f/k/a CENTRAL LIFE ASSURANCE COMPANY, an Iowa
corporation, of 611 Fifth Avenue, Des Moines, Iowa 50309 ("AML") to AMERUS
PROPERTIES, INC., an Iowa corporation, of 4949 Westown Parkway, Suite 245,
West Des Moines, Iowa 50266-1066 ("API").

W I T N E S S E T H:

WHEREAS, AML has been a limited partner in Theatre Project Limited
Partnership, an Oklahoma limited partnership ("Theatre"), under Limited
Partnership Agreement of Theatre Project Limited Partnership dated March 15,
1985 (the "Partnership Agreement");

WHEREAS, AML has secured the approval of the general partner, Tapp
Management, Inc., to transfer a portion of AML's seventy-nine percent (79%)
limited partnership interest in Theatre, which interest is equal to
forty-nine and ninety-five hundredths percent (49.95%) limited partnership
interest in Theatre to its wholly owned subsidiary, API pursuant to Section
351 of the Internal Revenue Code of 1986, as amended.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1. CONTRIBUTION OF INTEREST. AML hereby contributes all of AML's right,
title and interest to a portion of AML's seventy-nine percent (79%)
limited partnership interest in Theatre, which interest is equal to
forty-nine and ninety-five hundredths percent (49.95%) limited
partnership interest in Theatre to API pursuant to Section 351 of the
Internal Revenue Code of 1986, as amended.

2. FULL FORCE AND EFFECT. AML hereby covenants, warrants and represents
that its limited partnership interest is in full force and effect and
that AML has performed all of AML's obligations under the Partnership
Agreement.

<PAGE>

IN WITNESS WHEREOF, the parties have signed this Agreement as of the day
and year first above written.

AMERICAN MUTUAL LIFE INSURANCE AMERUS PROPERTIES, INC.,
COMPANY, an Iowa corporation an Iowa corporation

By: /s/ Diane M. Davidson By: /s/ William C. Knapp II
--------------------- -----------------------
Diane M. Davidson William C. Knapp II
Assistant Secretary President

General Partner Approval:

TAPP MANAGEMENT, INC.

By: /s/ Diane M. Davidson
---------------------
Diane M. Davidson
Vice President

<PAGE>

ASSIGNMENT OF JOINT VENTURE INTEREST
OF
TAPP AND LICO PROPERTIES

THIS ASSIGNMENT OF JOINT VENTURE INTEREST OF TAPP AND LICO PROPERTIES is
executed this 28th day of December, 1994, by LARTNEC INVESTMENT CO., an Iowa
corporation, of 611 Fifth Avenue, Des Moines, Iowa 50309 ("LICO") to CENTRAL
PROPERTIES, INC., an Iowa corporation, of 6000 Westown Parkway, Suite 200W, West
Des Moines, Iowa 50266-7711 ("CPI").

W I T N E S S E T H:

WHEREAS, LICO has been a joint venturer in Tapp and LICO Properties, an
Oklahoma joint venture ("T/L"), under a Joint Venture Agreement dated July 30,
1980, between F. Barry Tapp ("Tapp") holding a fifty percent (50%) joint venture
interest and LICO holding a fifty percent (50%) joint venture interest, as
amended by an Assignment of Interest dated December 24, 1981 assigning Tapp's
interest to Tapp Development Co., Ltd. ("TDC") and an Assignment of Partnership
Interest dated effective October 1, 1988 assigning TDC's interest to Central
Life Assurance Company ("CLAC") resulting in CLAC's fifty percent (50%) joint
venture interest and LICO's fifty percent (50%) joint venture interest (the
"Joint Venture Agreement");

WHEREAS, LICO desires to transfer ninety-nine and ninety-eight hundredths
percent (99.98%) of LICO's fifty percent (50%) interest in T/L, which interest
is equal to forty-nine and ninety-nine hundredths percent (49.99%) joint venture
interest in T/L, to its wholly owned subsidiary, CPI pursuant to Section 351 of
the Internal Revenue Code of 1986, as amended.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1. CONTRIBUTION OF INTEREST. LICO hereby contributes all of LICO's
right, title and interest to ninety-nine and ninety-eight hundredths
percent (99.98%) of its fifty percent (50%) joint venture interest in
T/L to CPI pursuant to Section 351 of the Internal Revenue Code of
1986, as amended.

2. FULL FORCE AND EFFECT. LICO hereby covenants, warrants and represents
that its joint venture interest is in full force and effect and that
LICO has performed all of LICO's obligations under the Joint Venture
Agreement.

<PAGE>

3. ACCEPTANCE. CPI hereby accepts the foregoing assignment of right,
title and interest and hereby assumes and agrees to be bound by and to
fulfill all of the terms, covenants and conditions under the Joint
Venture Agreement as of the date of this Agreement.

IN WITNESS WHEREOF, the parties have signed this Agreement as of the day
and year first above written.

LARTNEC INVESTMENT CO., CENTRAL PROPERTIES, INC.,
an Iowa corporation an Iowa corporation

By: /s/ Diane M. Davidson By: /s/ William C. Knapp II
--------------------- -----------------------
Diane M. Davidson William C. Knapp II
Assistant Secretary President

<PAGE>

ASSIGNMENT OF JOINT VENTURE INTEREST
OF
TAPP AND LICO PROPERTIES

THIS ASSIGNMENT OF JOINT VENTURE INTEREST OF TAPP AND LICO PROPERTIES is
executed this 30th day of December, 1995, by AMERICAN MUTUAL LIFE INSURANCE
COMPANY F/K/A CENTRAL LIFE ASSURANCE COMPANY, an Iowa corporation, of 611 Fifth
Avenue, Des Moines, Iowa 50309 ("AML") to AMERUS PROPERTIES, INC., F/K/A CENTRAL
PROPERTIES, INC., an Iowa corporation, of 4949 Westown Parkway, Suite 245, West
Des Moines, Iowa 50266-1066 ("API").

W I T N E S S E T H:

WHEREAS, AML has been a joint venturer in Tapp and LICO Properties, an
Oklahoma joint venture ("T/L"), under a Joint Venture Agreement dated July 30,
1980, between F. Barry Tapp ("Tapp") holding a fifty percent (50%) joint venture
interest and Lartnec Investment Co. ("LICO") holding a fifty percent (50%) joint
venture interest, as amended by an Assignment of Interest dated December 24,
1981 assigning Tapp's interest to Tapp Development Co., Ltd. ("TDC"), an
Assignment of Partnership Interest dated effective October 1, 1988 assigning
TDC's interest to AML, as amended by an Assignment of Joint Venture Interest
dated as of December 28, 1994 assigning a portion of LICO's joint venture
interest in the amount of forty-nine and ninety-nine hundredths percent (49.99%)
to API and as amended by an Assignment of Joint Venture Interest dated as of
December 29, 1995 assigning LICO's one hundredths percent (.01%) joint venture
interest to API resulting in AML's fifty percent (50%) joint venture interest,
and API's fifty percent (50%) joint venture interest (the "Joint Venture
Agreement");

WHEREAS, AML desires to transfer a portion of AML's fifty percent (50%)
interest in T/L, which interest is equal to forty-nine and ninety-five
hundredths percent (49.95%) joint venture interest in T/L, to its wholly owned
subsidiary, API pursuant to Section 351 of the Internal Revenue Code of 1986, as
amended.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

<PAGE>

1. CONTRIBUTION OF INTEREST. AML hereby contributes all of AML's right,
title and interest to a portion of its fifty percent (50%) joint
venture interest which interest is equal to forty-nine and ninety-five
hundredths percent (49.95%) joint venture interest in T/L to API
pursuant to Section 351 of the Internal Revenue Code of 1986, as
amended.

2. FULL FORCE AND EFFECT. AML hereby covenants, warrants and represents
that its joint venture interest is in full force and effect and that
AML has performed all of AML's obligations under the Joint Venture
Agreement.

3. ACCEPTANCE. API hereby accepts the foregoing assignment of right,
title and interest and hereby assumes and agrees to be bound by and to
fulfill all of the terms, covenants and conditions under the Joint
Venture Agreement as of the date of this Agreement.

IN WITNESS WHEREOF, the parties have signed this Agreement as of the day
and year first above written.

AMERICAN MUTUAL LIFE INSURANCE, AMERUS PROPERTIES, INC.,
COMPANY, an Iowa corporation an Iowa corporation

By: /s/ Diane M. Davidson By: /s/ William C. Knapp II
---------------------- ------------------------
Diane M. Davidson William C. Knapp II
Assistant Secretary President

<PAGE>

ASSIGNMENT OF JOINT VENTURE INTEREST
OF
ROUND ROCK OUTLET, LTD.

THIS ASSIGNMENT OF JOINT VENTURE INTEREST OF ROUND ROCK OUTLET, LTD. is
executed this 28th day of December, 1994, by LARTNEC INVESTMENT CO., an Iowa
corporation, of 611 Fifth Avenue, Des Moines, Iowa 50309 ("LICO") to CENTRAL
PROPERTIES, INC., an Iowa corporation, of 6000 Westown Parkway, Suite 200W, West
Des Moines, Iowa 50266-7711 ("CPI").

W I T N E S S E T H:

WHEREAS, LICO has been a joint venturer in Round Rock Outlet Ltd., an
Oklahoma joint venture ("Round Rock"), under a Joint Venture Agreement dated
December 30, 1980, between MBT, LTD. ("MBT") holding a fifty percent (50%)
joint venture interest and LICO holding a fifty percent (50%) joint venture
interest, as amended by two (2) Assignments of Interest dated December 24,
1981 assigning MBT's interest to Tapp Development Co., Ltd. ("TDC") and an
Assignment of Partnership Interest dated effective October 1, 1988 assigning
TDC's interest to Central Life Assurance Company ("CLAC") resulting in CLAC's
fifty percent (50%) joint venture interest and LICO's fifty percent (50%)
joint venture interest (the "Joint Venture Agreement");

WHEREAS, LICO desires to transfer ninety-nine and ninety-eight hundredths
percent (99.98%) of LICO's fifty percent (50%) interest in Round Rock, which
interest is equal to forty-nine and ninety-nine hundredths percent (49.99%)
joint venture interest in Round Rock, to its wholly owned subsidiary, CPI
pursuant to Section 351 of the Internal Revenue Code of 1986, as amended.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1. CONTRIBUTION OF INTEREST. LICO hereby contributes all of LICO's
right, title and interest to ninety-nine and ninety-eight hundredths
percent (99.98%) of its fifty percent (50%) joint venture interest in
Round Rock to CPI pursuant to Section 351 of the Internal Revenue Code
of 1986, as amended.

1
<PAGE>

3. ACCEPTANCE. CPI hereby accepts the foregoing assignment of right,
title and interest and hereby assumes and agrees to be bound by and to
fulfill all of the terms, covenants and conditions under the Joint
Venture Agreement as of the date of this Agreement.

IN WITNESS WHEREOF, the parties have signed this Agreement as of the day
and year first above written.

LARTNEC INVESTMENT CO., CENTRAL PROPERTIES, INC.,
an Iowa corporation an Iowa corporation

By: /s/ Diane M. Davidson By: /s/ William C. Knapp II
_____________________ _____________________________
Diane M. Davidson William C. Knapp II
Assistant Secretary President

<PAGE>

ASSIGNMENT OF JOINT VENTURE INTEREST
OF
ROUND ROCK OUTLET, LTD.

THIS ASSIGNMENT OF JOINT VENTURE INTEREST OF ROUND ROCK OUTLET, LTD. is
executed this 30th day of December, 1995, by AMERICAN MUTUAL LIFE INSURANCE
COMPANY F/K/A CENTRAL LIFE ASSURANCE COMPANY, an Iowa corporation, of 611 Fifth
Avenue, Des Moines, Iowa 50309 ("AML") to AMERUS PROPERTIES, INC., F/K/A CENTRAL
PROPERTIES, INC., an Iowa corporation, of 4949 Westown Parkway, Suite 245, West
Des Moines, Iowa 50266-1066 ("API").

W I T N E S S E T H:

WHEREAS, AML has been a joint venturer in Round Rock Outlet, Ltd., an
Oklahoma joint venture ("Round Rock"), under a Joint Venture Agreement dated
December 30, 1980, between MBT, LTD. ("MBT") holding a fifty percent (50%) joint
venture interest and Lartnec Investment Co. (" LICO") holding a fifty percent
(50%) joint venture interest, as amended by two (2) Assignments of Interest
dated December 24, 1981 assigning MBT's interest to Tapp Development Co., Ltd.
("TDC"), an Assignment of Partnership Interest dated effective October 1, 1988
assigning TDC's interest to AML, as amended by an Assignment of Joint Venture
Interest dated as of December 28, 1994 assigning a portion of LICO's joint
venture interest in the amount of forty-nine and ninety-nine hundredths percent
(49.99%) to API and as amended by an Assignment of Joint Venture Interest dated
as of December 29, 1995 assigning LICO's one hundredths percent (.01%) joint
venture interest to API resulting in AML's fifty percent (50%) joint venture
interest and API's fifty percent (50%) joint venture interest (the "Joint
Venture Agreement");

WHEREAS, AML desires to transfer a portion of AML's fifty percent (50%)
interest in Round Rock, which interest is equal to forty-nine and ninety-five
hundredths (49.95%) joint venture interest in Round Rock, to its wholly owned
subsidiary, API pursuant to Section 351 of the Internal Revenue Code of 1986, as
amended.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

<PAGE>

1. CONTRIBUTION OF INTEREST. AML hereby contributes all of AML's right,
title and interest to a portion of its fifty percent (50%) joint
venture interest in Round Rock which interest is equal to forty-nine
and ninety-five hundredths percent (49.95%) joint venture interest in
Round Rock, to API pursuant to Section 351 of the Internal Revenue
Code of 1986, as amended.

3. ACCEPTANCE. API hereby accepts the foregoing assignment of right,
title and interest and hereby assumes and agrees to be bound by and to
fulfill all of the terms, covenants and conditions under the Joint
Venture Agreement as of the date of this Agreement.

IN WITNESS WHEREOF, the parties have signed this Agreement as of the day
and year first above written.

AMERICAN MUTUAL LIFE INSURANCE AMERUS PROPERTIES, INC.,
COMPANY, an Iowa corporation an Iowa corporation

By: /s/ Diane M. Davidson By: /s/ William C. Knapp II
______________________ ____________________
Diane M. Davidson William C. Knapp II
Assistant Secretary President

<PAGE>

Exhibit 11.1

AMERUS LIFE HOLDINGS, INC.
Statement Re Computation of Earnings Per Share

Pro Forma Weighted Average Number of Shares (in thousands)
- ----------------------------------------------------------

Class A Common Stock owned by AmerUs Group 14,500

Class B Common Stock owned by AmerUs Group 5,000
------
19,500*
======

*The issuance of Class A and Class B Common Stock to AmerUs Group is
considered to have occurred as of January 1, 1995 for pro forma purposes;
therefore, the weighted average number of shares outstanding is 19,500. The
Company has no dilution of shares.

Primary Pro Forma Earnings Per Common Share
- -------------------------------------------
<TABLE>
<CAPTION>
Nine months ended Year ended
Sept 30, 1996 Dec 31, 1995
----------------- ------------
<S> <C> <C>
Historical earnings $3.40 $3.56

Investment income on Capital Contribution (net of tax) (.01) (.02)
----- -----
Primary Pro Forma Earnings Per Common Share $3.39 $3.54
===== =====
</TABLE>

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
AmerUs Life Holdings, Inc.:

We consent to the use of our reports included herein and to the
reference to our firm under the heading "Experts" in the Prospectus.

/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP

Des Moines, Iowa
November 6, 1996

<PAGE>
Exhibit 23.3

CONSENT OF TILLINGHAST

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of reference to us under the headings "THE
REORGANIZATION AND DISTRIBUTION OF THE NON-LIFE INSURANCE SUBSIDIARIES - Closed
Block Assets and Liabilities" and "EXPERTS" in such Prospectus and the inclusion
of our opinion related to the establishment and operation of the closed block as
an exhibit to the Registration Statement. In giving such consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the Rules and
Regulations of the Securities and Exchange Commission thereunder.

/s/ TILLINGHAST - TOWERS PERRIN
-------------------------------
TILLINGHAST - TOWERS PERRIN

New York, NY
November 5, 1996

<PAGE>
EXHIBIT 99.1
SUBSCRIPTION ORDER FORM

-----------------------------------------
EXPIRATION DATE

The Subscription Offering will expire
at 4:00 p.m., New York time, on Tuesday,
December 3, 1996. In order to subscribe
for shares, this completed Subscription
Order Form and payment in full must be
received by the Transfer and Escrow Agent
by such time on such date. Subscriptions
for shares of Class A Common Stock of
AmerUs Life Holdings, Inc. are
irrevocable. If you do not wish to
subscribe for shares, you do not need to
return this Subscription Order Form.
- --------------------------------------------------------------------------------
GENERAL

THIS FORM IS TO BE COMPLETED AND RETURNED TO THE TRANSFER AND ESCROW AGENT BY
ALL SUBSCRIPTION POLICYOWNERS ELECTING TO SUBSCRIBE FOR SHARES OF CLASS A COMMON
STOCK OF AMERUS LIFE HOLDINGS, INC.
BEFORE COMPLETING THIS SUBSCRIPTION ORDER FORM, YOU ARE URGED TO READ
CAREFULLY THE PROSPECTUS MAILED TO YOU WITH THIS FORM, AND, IF YOU HAVE ANY
QUESTIONS, TO REFER TO THE ACCOMPANYING QUESTIONS AND ANSWERS SUPPLEMENT. IF YOU
DO NOT COMPLETE AND SIGN THIS SUBSCRIPTION ORDER FORM PROPERLY, IT MAY BE
REJECTED.
AmerUs Life Holdings, Inc. may determine to cancel or rescind the Subscription
Offering at any time prior to the closing of the Subscription Offering. In such
case, cash payments made by subscribers will be promptly refunded with accrued
interest as described in the Prospectus.

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

NUMBER OF SHARES

Fill in the number of shares you wish to purchase (which must be a whole
number and which must be at least 100 and no more than 5,000):

<TABLE>
<S> <C> <C> <C> <C>
SHARES X SUBSCRIPTION PRICE
= AMOUNT DUE
X $[ ] = $
</TABLE>

- --------------------------------------------------------------------------------
PAYMENT

If you are purchasing shares, you must enclose a check or money order in U.S.
dollars payable to "AmerUs Life Holdings, Inc." for the total amount of your
purchase, as indicated above. Your right to purchase shares is non-transferable
and non-assignable.

When you have completed this Subscription Order Form, please mail the form
with your check or money order in the postage-paid envelope provided. Your
Subscription Order Form and payment in full must be received by the Transfer and
Escrow Agent by 4:00 p.m., New York time, on Tuesday, December 3, 1996. If the
postage-paid envelope is lost, your Subscription Order Form and payment in full
should be returned to AmerUs Life Holdings, Inc., c/o ChaseMellon Shareholder
Services, P.O. Box 768, Midtown Station, New York, NY 10018, if sent by mail, or
ChaseMellon Shareholder Services, 120 Broadway, 13th Floor, New York, NY 10271,
if by hand, express mail or overnight courier. Stock certificates will be mailed
to you within 10 days after the closing of the Subscription Offering.

- --------------------------------------------------------------------------------
STOCK REGISTRATION (PLEASE PRINT CLEARLY)

Please indicate the name(s) in which your stock should be registered and check
the appropriate box for the form in which your stock should be registered. You
may make any corrections to your name and address (from that shown at the top of
this form) on the lines provided.

--------------------------------------------------------------------------------------------------------------------------------
Social Security #Tax ID# (certificate will show
(First Name) (M.I.) (Last Name) this number)
--------------------------------------------------------------------------------------------------------------------------------
(First Name) (M.I.) (Last Name) Social Security #Tax ID#
--------------------------------------------------------------------------------------------------------------------------------
(Street Address)
---------------------------------------------------------------------------
(City) (State) (County) (Zip)
</TABLE>
<TABLE>
<S> <C> <C>
Form of Stock Ownership (check one)
/ / Individual / / Joint Tenants / / Tenants in Common
/ / Individual Retirement Account (IRA) / / Corporation

<CAPTION>
Form of Stock Ownership (c
/ / Individual / / Uniform Transfer to Minors
/ / Individual Retirement / / Fiduciary (Under Agreement Dated , 199 )
</TABLE>

- --------------------------------------------------------------------------------
NASD AFFILIATION

/ / Check here if you are a member of the National Association of Securities
Dealers, Inc. (NASD) or a person associated with an NASD member. Participation
by such persons in the Subscription Offering is only permissible in accordance
with, and subject to the limitations of, Rule 2110 of the Conduct Rules of the
NASD and the "Free-Riding and Withholding Interpretation" promulgated
thereunder. In general, "associated with" an NASD member includes (i) every
officer, director, general partner, employee or agent of a broker/dealer that is
a member of the NASD (a "member"), (ii) every sole proprietor, partner, officer,
director, or branch manager of any member, or any natural person occupying a
similar status or performing similar functions, or any natural person engaged in
the investment banking or securities business who is directly or indirectly
controlling or controlled by such member, whether or not any such person is
registered or exempt from registration with the NASD and (iii) any immediate
family member of any such person; and "immediate family" includes parents,
mother-in-law or father-in-law, husband or wife, brother or sister,
brother-in-law or sister-in-law, son-in-law or daughter-in-law, and children and
any other person who is supported, directly or indirectly, to a material extent
by any person referred to in clause (i) or (ii). To comply with conditions under
which an exemption from the NASD's Interpretation With Respect to Free-Riding
and Withholding is available, you agree, if you have checked the NASD
Affiliation box, (i) not to sell, transfer or hypothecate the stock for a period
of 180 days following issuance and (ii) to report this subscription in writing
to the applicable NASD member within one day of payment therefor. IF YOU HAVE
CHECKED THE NASD AFFILIATION BOX, YOU MUST CONTACT JAMES A. SMALLENBERGER, ESQ.,
SENIOR VICE PRESIDENT AND SECRETARY OF AMERUS LIFE HOLDINGS, INC. PRIOR TO
PARTICIPATING IN THE SUBSCRIPTION OFFERING. HE MAY BE REACHED AT AMERUS LIFE
HOLDINGS, INC., 418 SIXTH AVENUE, DES MOINES, IOWA 50309-2499, TELEPHONE NUMBER
(515) 280-1331.

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

TELEPHONE NUMBERS

Please provide a phone number at which you can be reached in the event that we
have questions regarding the information that you have supplied:

Daytime ( )
Evening ( )

- --------------------------------------------------------------------------------
ACKNOWLEDGMENTS AND SIGNATURE

In order for you to purchase shares of Class A Common Stock of AmerUs Life
Holdings, Inc. in the Subscription Offering, you must sign this Subscription
Order Form and date it.

Please sign exactly as your name or names appear at the top of this Form. If
more than one name is listed at the top of this form, all those listed must
sign. When signing as attorney, executor, adminstrator, trustee or guardian,
please give your full title as such. If signing for a corporation, sign by an
authorized officer and indicate title. If a partnership, sign in the name of an
authorized person.

I (WE) ACKNOWLEDGE RECEIPT OF THE PROSPECTUS AND MY (OUR) OFFER TO PURCHASE
SHARES, AS SET FORTH ON THIS SUBSCRIPTION ORDER FORM. UNDER PENALTIES OF
PERJURY, I (WE) CERTIFY THAT (1) THE SOCIAL SECURITY #(S) OR TAX ID#(S) GIVEN
ABOVE IS (ARE) CORRECT; AND (2) I (WE) AM (ARE) NOT SUBJECT TO BACKUP
WITHHOLDING TAX (YOU MUST CROSS OUT #2 IF YOU HAVE BEEN NOTIFIED BY THE INTERNAL
REVENUE SERVICE THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING BECAUSE OF REPORTING
INTEREST OR DIVIDENDS ON YOUR TAX RETURN).

<TABLE>
<S> <C>
SIGNATURE DATE
X
SIGNATURE (IF SECOND SIGNATURE REQUIRED) DATE
X
</TABLE>

IF YOU HAVE ANY QUESTIONS, PLEASE CALL THE INFORMATION CENTER AT 1-800-235-1725,
TOLL FREE.

<PAGE>
EXHIBIT 99.2
SUBSCRIPTION
OFFERING
QUESTIONS
AND
ANSWERS

[LOGO]

AMERUS LIFE HOLDINGS, INC.
<PAGE>
AMERUS LIFE HOLDINGS, INC.

SUBSCRIPTION OFFERING: QUESTIONS AND ANSWERS

AmerUs Life Holdings, Inc. (the "Company"), the parent company of AmerUs Life
Insurance Company ("AmerUs Life") is "going public." Five million (5,000,000)
shares of the Company's Class A Common Stock will be offered to eligible
policyowners of AmerUs Life (the "Subscription Offering"), on a priority basis.
The following information is designed to answer several basic questions about
the Subscription Offering and the transactions to be completed by the Company in
going public. Please refer to the Prospectus for a detailed explanation of the
Subscription Offering. If you have any questions, please contact the Information
Center toll-free at 1-800-235-1725.

1. WHAT IS THE SUBSCRIPTION OFFERING?

The Subscription Offering is an offering of the Company's Class A Common
Stock to eligible policyowners of AmerUs Life ("Eligible Policyowners"). The
right to participate in the Subscription Offering is non-transferable.

2. AM I ELIGIBLE TO PARTICIPATE IN THE SUBSCRIPTION OFFERING?

Yes. As a result of (i) owning a policy of insurance with AmerUs Life as of
June 30, 1996, and (ii) requesting a Prospectus be mailed to you, you have
received this package of information and are eligible to subscribe for
shares of the Company's Class A Common Stock in the Subscription Offering.

3. WILL THE COMPANY'S SUBSCRIPTION OFFERING AFFECT MY INSURANCE POLICY?

No. The Subscription Offering will not, in any way, change premiums or
reduce policy values, guarantees or any other obligations of AmerUs Life to
its policyowners. In addition to these contractual rights, dividends will
continue to be paid on insurance policies as declared by the Board of
Directors of AmerUs Life. As always,
<PAGE>
dividends on insurance policies are not guaranteed and may vary from year to
year.

4. HOW MANY SHARES OF CLASS A COMMON STOCK CAN I BUY AND WHAT IS THE PRICE?

You may subscribe for a minimum of 100 shares and up to a maximum of 5,000
shares (or any number of shares in between), at a per share subscription
price of $ (the "Subscription Price"). The Subscription Price may
subsequently be adjusted downward and cash refunds reflecting the difference
will be returned to all subscribers. The price per share will in no event
exceed the Subscription Price.

5. CAN MORE THAN ONE PERSON PER HOUSEHOLD SUBSCRIBE FOR SHARES IN THIS
SUBSCRIPTION OFFERING?

Yes, provided that each person is an Eligible Policyowner. (See requirements
in Question 2).

6. ARE THERE ANY OTHER LIMITATIONS ON PARTICIPATING IN THE SUBSCRIPTION
OFFERING?

Subscribers who are "associated with a broker or dealer" are required to
contact the Company as a condition to participating in the Subscription
Offering. A person "associated with a broker or dealer" is one who is
subject to paragraph (2) of the "Free-Riding and Withholding Interpretation"
of Article III, Section 1 of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. and described on page of the
Prospectus under the heading "Exercise of Subscription Rights."

7. HOW DO I SUBSCRIBE FOR SHARES?

(1) Complete and sign the enclosed Subscription Order Form related to the
Subscription Offering;

(2) Mail the form with a check or money order (a certified check is
acceptable, but not required) for the number of shares in the enclosed
envelope. This envelope is for United States Postal Service (USPS)
Express Mail. It is pre-addressed and postage-paid. You can send it by
(1) dropping it off at your local post office or
<PAGE>
(2) placing it in an Express Mail box. If you would prefer to have your
envelope picked up, call 1-800-222-1811; the USPS will charge you a fee
for the pick-up service.

If you misplace the envelope, mail your Form and payment to:

AmerUs Life Holdings, Inc.
c/o ChaseMellon Shareholder Services
P.O. Box 768
Midtown Station
New York, NY 10018

ChaseMellon is the Company's Transfer and Escrow Agent (referred to as
the "Transfer Agent"); and
(3) Your Form and payment MUST BE RECEIVED BY THE TRANSFER AGENT NO LATER
THAN 4:00 P.M., NEW YORK TIME, ON TUESDAY, DECEMBER 3, 1996.

Note: Your check must be "good funds" meaning that: they must be
drawn on a U.S. bank, payable in U.S. dollars; a check returned
for insufficient funds is not "good funds"--at the option of
the Company it may be returned to the Sender with no attempt to
redeposit. A money order must be payable in U.S. dollars.

8. WHAT IS THE SUBSCRIPTION ORDER FORM?

The Subscription Order Form is the document that you must complete, sign and
return to the Transfer Agent in order to purchase shares in the Subscription
Offering. The document requires certain important information, such as your
name, address and social security number, or Taxpayer Identification Number,
as appropriate. The Subscription Order Form also requires you to confirm
that you have received the Prospectus. A Subscription Order Form is included
in this Subscription Package. Photocopies of the Subscription Order Form may
be returned to the Transfer Agent, but must include your original signature.
<PAGE>
9. WHAT FORM OF PAYMENT SHOULD I USE WHEN I RETURN THE SUBSCRIPTION ORDER FORM?

Payment may be made only by check or money order. Cash or credit card
payments will not be accepted. Upon receipt of your Subscription Order Form
by the Transfer Agent, your check or money order will be deposited by the
Transfer Agent in an escrow account with the Transfer Agent, for safekeeping
until the earlier of (i) the closing of the Subscription Offering currently
scheduled for mid-December 1996, or (ii) at the option of the Company, the
termination of the Subscription Offering.

10. WHO SHOULD BE THE PAYEE ON MY CHECK OR MONEY ORDER?

Your check or money order should be made payable to "AmerUs Life Holdings,
Inc." Please ensure your name is on your check or shown as the remitter on a
money order.

11. HOW SHOULD I RETURN MY SUBSCRIPTION ORDER FORM?

Return your fully completed and signed Subscription Order Form along with
your check or money order to the Transfer Agent in the enclosed envelope. If
you lose the envelope, the address is listed in Question 7. Please be sure
to allow adequate mailing time for your Subscription Order Form and check or
money order to be RECEIVED BY THE TRANSFER AGENT NO LATER THAN THE
SUBSCRIPTION EXPIRATION DATE (4:00 P.M., NEW YORK TIME, ON TUESDAY, DECEMBER
3, 1996).

12. WILL I EARN INTEREST ON FUNDS SUBMITTED TO PURCHASE SHARES IN THE
SUBSCRIPTION OFFERING?

Funds you submit to purchase shares in the Subscription Offering will not
earn interest unless (i) the Subscription Offering is canceled, or (ii) the
period from the Subscription Expiration Date until the closing of the
Subscription Offering exceeds 60 days (in which case interest will be paid
for such period). The interest paid in either case will be at the rate of
3.5% per annum.
<PAGE>
13. WHAT IS THE DEADLINE TO SUBMIT MY SUBSCRIPTION ORDER FORM AND CHECK FOR GOOD
FUNDS TO THE TRANSFER AGENT?

The completed and signed Subscription Order Form accompanied by checks or
money orders for good funds must be RECEIVED BY THE TRANSFER AGENT NO LATER
THAN 4:00 P.M., NEW YORK TIME, ON TUESDAY, DECEMBER 3, 1996, to be
considered for acceptance by the Company.

14. CAN I FIND OUT IF MY SUBSCRIPTION ORDER FORM HAS BEEN RECEIVED BY THE
SUBSCRIPTION AGENT PRIOR TO THE CLOSING OF THE SUBSCRIPTION OFFERING?

Yes, an acknowledgment of receipt will be mailed by the Transfer Agent to
you.

15. MAY I REVOKE MY SUBSCRIPTION ORDER FORM ONCE IT HAS BEEN RECEIVED BY THE
SUBSCRIPTION AGENT?

No. Once your Subscription Order Form has been received by the Transfer
Agent, it is irrevocable. After the Company has gone public, you can
buy/sell shares as with any other publicly traded stock.

16. IF I AM QUALIFIED TO INVEST IN THE SUBSCRIPTION OFFERING AND SUBMIT MY CHECK
OR MONEY ORDER FOR GOOD FUNDS TOGETHER WITH A PROPERLY COMPLETED AND SIGNED
SUBSCRIPTION ORDER FORM, WILL I DEFINITELY BECOME A STOCKHOLDER OF THE
COMPANY?

Not necessarily. The Company reserves the right to cancel the Subscription
Offering at any time prior to the closing of the Subscription Offering. If
this occurred, your funds would be returned in full, with interest at the
rate of 3.5% per annum.

17. WHEN CAN I EXPECT TO RECEIVE THE STOCK CERTIFICATE FOR MY CLASS A COMMON
STOCK?

It is expected that the Subscription Offering will close in mid-December
1996. A stock certificate for your shares and any refund check, if
applicable, will be mailed to you within 10 days thereafter.
<PAGE>
18. HOW MANY STOCK CERTIFICATES WILL I RECEIVE FOR MY SHARES OF CLASS A COMMON
STOCK?

You will receive one stock certificate representing all shares of Class A
Common Stock purchased by you in the Subscription Offering. Unfortunately,
you may NOT request additional certificates for smaller denominations of
shares.

19. HOW MUCH WILL I PAY PER SHARE FOR THE COMPANY'S CLASS A COMMON STOCK?

The Subscription Price of the Class A Common Stock offered in the
Subscription Offering is $ per share. However, if the Public Offering is
priced at an initial public offering price per share lower than $ per
share, or if the Subscription Price is adjusted downward, then subscribers
in the Subscription Offering will be entitled to a refund for the difference
between $ and the final initial public offering price or adjusted
Subscription Price times the number of shares purchased. Subscribers will be
mailed a check for the amount of such refund.

20. WHAT IS THE "PUBLIC OFFERING"?

If the 5,000,000 shares offered in the Prospectus are not fully subscribed
for in the Subscription Offering, the Company intends to sell all or a
portion of the remaining shares in an underwritten offering to the public
called the "Public Offering."

21. WHAT IF MY ADDRESS CHANGES EITHER DURING THE SUBSCRIPTION OFFERING OR BEFORE
I RECEIVE MY STOCK CERTIFICATE?

The stock certificate and any refund check will be mailed to the address
provided in the Subscription Order Form. Therefore, it is your
responsibility to provide appropriate forwarding instructions to your post
office, or, when completing your Subscription Order Form, provide an address
where you will be sure your mail will be safely received.
<PAGE>
22. WILL I BE CHARGED A COMMISSION ON THE PURCHASE OF THE CLASS A COMMON STOCK
IN THE SUBSCRIPTION OFFERING?

No brokerage commission will be charged on the sale of shares in the
Subscription Offering.

23. CAN I PURCHASE SHARES OF CLASS A COMMON STOCK IN THE SUBSCRIPTION OFFERING
THROUGH MY BROKER?

No. Shares offered in the Subscription Offering may be purchased only
through the subscription process described in the Prospectus and herein. See
"The Subscription Offering" beginning on page of the Prospectus. After the
Company has gone public, its Class A Common Stock can be bought/sold like
any other common stock.

24. WHAT STOCK EXCHANGE WILL THE CLASS A COMMON STOCK BE TRADED ON AND WHAT WILL
THE TICKER SYMBOL BE?

The Class A Common Stock has been authorized for listing on the NASDAQ
National Market under the symbol "AMRS", subject to official notice of
issuance.

25. CAN I CALL THE TRANSFER AGENT OR THE SUBSCRIPTION AGENT WITH ANY QUESTIONS?

You may call the Transfer Agent or the Subscription Agent, The Chicago
Corporation, toll-free at 1-800-235-1725.

November 15, 1996

<PAGE>

[LETTERHEAD OF TILLINGHAST, A TOWERS PERRIN COMPANY]

October 26, 1995

The Board of Directors
American Mutual Life Insurance Company
611 Fifth Avenue
Des Moines, IA 50309

Re: Statement of Actuarial Opinions Regarding the Closed Block to be
Established by American Mutual Life Insurance Company

QUALIFICATIONS AND USAGE

I, Gary Corbett, am associated with the firm of Tillinghast, a
Towers Perrin Company, and am a member of the American Academy of Actuaries,
qualified under the Academy's Qualification Standards to render the opinions set
forth herein.

Tillinghast has been engaged by American Mutual to perform certain services in
connection with the establishment of a Mutual Holding Company and the conversion
of American Mutual into a stock life insurance company. One of these services
is to prepare actuarial opinions regarding the Closed Block that American Mutual
will establish in order to properly protect the interests of policyholders. In
forming these opinions, I have reviewed the process used by American Mutual to
determine the allocation of assets to the Closed Block and the assumptions used
in this process. The opinions set forth herein are not legal opinions
concerning the requirements of applicable Iowa law but, rather, constitute
opinions that reflect the application of sound actuarial principles to certain
aspects related to the Closed Block.

I am aware that my opinions will be furnished to the Iowa Division of Insurance
for its use in determining the fairness of the Plan of Reorganization and I
consent to the use of my opinions for that
purpose.

RELIANCE

In developing these opinions, I, and other Tillinghast staff acting under my
direction, have received from American Mutual information concerning American
Mutual's past and present practices. I have

-1-

<PAGE>

relied upon this information, which was provided under the general direction of
Vice President, Asset/Liability Management, Brian J. Clark, MAAA, FSA. We have
not independently verified and assume no responsibility for the accuracy or
completeness of such information. However, where practicable, we have reviewed
such information for general reasonableness and internal consistency. American
Mutual has represented and warranted that the information provided to us is
accurate and complete in all material respects. My opinions depend on the
substantial accuracy of this information.

OPINION REGARDING THE FUNDING AND OPERATION OF THE CLOSED BLOCK

In my opinion, American Mutual's concept of, and plans for, the establishment
and operation of the Closed Block as set forth in Article V of the Plan of
Reorganization (including the Closed Block Memorandum, an Exhibit thereto), make
adequate provision for allocating to the Closed Block assets which will be
reasonably sufficient to enable the Closed Block to provide for the guaranteed
benefits and certain expenses and taxes associated with Closed Block policies,
and to provide for the continuation of the dividend scales and interest credits
in effect for 1995 if the experience underlying such scales and credits
continues. In my opinion, Article V also provides for appropriate adjustment of
the dividend scales and interest credits if the underlying experience changes
from that underlying the dividend scales and interest credits in effect for
1995.

DISCUSSION

The Closed Block Memorandum describes the process by which assets will be
allocated to the Closed Block as of the Effective Date, December 31, 1995.
The process has three essential steps:

1. Defining the elements that constitute the experience underlying the
dividend scales and interest credits in effect for 1995.

2. Defining the projection process used, in conjunction with (1), to
determine the cash flow requirements of the Closed Block for each year
of its projected future existence.

-2-

<PAGE>

3. Selecting assets whose cash flows, when taken in conjunction with
anticipated reinvestment of available Closed Block assets, will
provide funds to meet the cash requirements of the Closed Block.

I find that the elements of experience underlying the dividend scales and
interest credits in effect for 1995 have been determined correctly, that
the process is consistent with normal actuarial techniques for determining
cash flow requirements, and that - based on test calculations using actual
assets held as June 30, 1995 - it will be possible to select assets with
the required characteristics.

The criteria set forth in Article V for modifying the dividend scales and
interest credits if the experience changes are such that, if followed, the
Closed Block policyholders will be treated equitably in a manner consistent
with the contribution principle. Although the Iowa Code does not contain a
requirement that there be a Closed Block in the event of the establishment
of a Mutual Holding Company, the funding and operation of the Closed Block
as set forth in Article V are consistent with actuarial practice.

OPINION REGARDING THE CLASSES OF POLICYHOLDERS INCLUDED IN THE CLOSED BLOCK

In my opinion, the definition of the classes of policyholders included in the
Closed Block as set forth in Schedule 1 of the Plan of Reorganization is fair
and reasonable.

DISCUSSION

Schedule I of the Plan of Reorganization provides that individual life
insurance policies with a current dividend scale will be included in the
Closed Block, but that other contracts will be excluded from the Closed
Block. These provisions separate the American Mutual business into two
broad groupings:

A. CATEGORIES OF POLICIES INCLUDED IN THE CLOSED BLOCK

-3-

<PAGE>

1. INDIVIDUAL TRADITIONAL LIFE. All classes of participating
individual traditional life insurance policies, including ancillary
benefits and riders; also, all classes of extended term insurance
policies which have arisen therefrom.

2. UNIVERSAL LIFE. Two classes of universal life policies, on which
dividends, similar to a persistency bonus, are payable.

B. CATEGORIES OF POLICIES AND CONTRACTS EXCLUDED FROM THE CLOSED BLOCK

1. UNIVERSAL LIFE AND SINGLE PREMIUM WHOLE LIFE (INTEREST
SENSITIVE). All classes of participating individual universal life
insurance policies except for the classes on which dividends are
payable (A.2 above) and single premium whole life (interest sensitive)
policies. (No dividends have been paid under these policies from their
inception and the policies were designed to operate without dividend
scales.)

2. ANNUITIES, INCLUDING SUPPLEMENTARY CONTRACTS. All classes of
annuities (excluding annuity riders attached to individual traditional
life insurance policies) and supplementary contracts, whether
participating or not, for which, under the Company's dividend scales
in effect for 1995, no dividends are payable at any duration.
(Contract forms vary, but no dividends have been paid under any of
these classes from their inception with the exception of a block of
individual annuities and supplementary contracts where the company has
accounted for some interest credits as dividends. Article 5.4 of the
Plan provides that the Company will guarantee the current level of
dividends prospectively for these contracts.)

3. INDIVIDUAL ACCIDENT AND HEALTH. All classes of individual
accident and health insurance policies. (These policies provide for
the possibility of dividends, but no dividends have been paid since
1991, and the Company believes that there is no likelihood of paying
dividends on these policies in the future.)

-4-

<PAGE>

4. GROUP INSURANCE. All classes of policies providing group life
insurance or group accident and health insurance. (Policy forms vary
but, except for a few cases which have received and will continue to
be eligible for dividends based on their own experience, no dividends
have been paid under any policy in these classes since their
inception.)

I find that the above-described inclusion of certain classes of policies and
contracts in the Closed Block, and the exclusion of other classes from the
Closed Block, are:

1. consistent with the objective of the Closed Block, which is the
preservation of reasonable dividend expectations, and

2. generally consistent with actuarial literature and emerging actuarial
practice as they relate to Closed Blocks.

Sincerely yours,

/s/ Gary Corbett
Gary Corbett, FSA, MAAA

8405 NE 7th St
Medina, Wa 98039-4804
(206/454-0290)

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