AMERUS CAPITAL I, S-1/A, 1996-12-20

AMERUS CAPITAL I
S-1/A, 1996-12-20
LIFE INSURANCE

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 19, 1996

REGISTRATION NO. 333-13713

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

AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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

<TABLE>
<S> <C>
AMERUS CAPITAL I AMERUS LIFE HOLDINGS, INC.
(Exact name of Registrant as specified in its charter) (Exact name of Registrant as specified in its charter)
DELAWARE IOWA
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
42-6559006 42-1459712
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
6719 6719
(Primary Standard Industrial (Primary Standard Industrial
Classification Code Number) Classification Code Number)
418 SIXTH AVENUE 418 SIXTH AVENUE
DES MOINES, IOWA 50309-2407 DES MOINES, IOWA 50309-2407
(515) 280-1331 (515) 280-1331
(Address, including zip code, and telephone number, (Address, including zip code, and telephone number,
including area code, of Registrant's principal executive including area code, of Registrant's principal executive
offices) offices)
</TABLE>

JAMES A. SMALLENBERGER
SENIOR VICE PRESIDENT AND SECRETARY
AMERUS LIFE HOLDINGS, INC.
418 SIXTH AVENUE
DES MOINES, IOWA 50309-2407
(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) 853-7000 (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. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE FEE(2)
<S> <C> <C> <C> <C>
Quarterly Income Preferred Securities of AmerUs Capital
I.......................................................
Junior Subordinated Debentures of AmerUs Life Holdings,
Inc.(3).................................................
Guarantee of AmerUs Life Holdings, Inc. with respect to
the Quarterly Income Preferred Securities of AmerUs
Capital I(4)............................................
Total.............................................. 3,450,000 $25.00 $86,250,000
</TABLE>

(1) Estimated solely for purposes of determining the registration fee.

(2) Calculated pursuant to Rule 457(a) based on an estimate of the maximum
offering price.

(3) The Junior Subordinated Debentures will be purchased by AmerUs Capital I
with the proceeds of the sale of the Quarterly Income Preferred Securities.
No separate consideration will be received for the Junior Subordinated
Debentures.

(4) No separate consideration will be received for the AmerUs Life Holdings,
Inc. Guarantee. Pursuant to Rule 457(a) no separate fee is payable in
respect of the AmerUs Life Holdings, Inc. Guarantee.
------------------

THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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 DECEMBER 19, 1996

3,000,000 PREFERRED SECURITIES

AMERUS CAPITAL I

% CUMULATIVE QUARTERLY INCOME PREFERRED SECURITIES,
SERIES A (QUIPS-SM-)*
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT THE ISSUER HAS FUNDS, AS SET FORTH HEREIN, BY

AMERUS LIFE HOLDINGS, INC.
---------

The % Cumulative Quarterly Income Preferred Securities, Series A (the
"Preferred Securities") offered hereby (the "Preferred Offering"), represent
undivided beneficial interests in the assets of AmerUs Capital I, a trust formed
under the laws of the State of Delaware (the "Issuer" or the "Trust"). AmerUs
Life Holdings, Inc., an Iowa corporation ("ALH"), will be the owner of all of
the beneficial interests represented by common securities (the "Common
Securities") of the Issuer. Wilmington Trust Company is the Property Trustee of
the Issuer. The Issuer exists for the sole purpose of issuing the Preferred
Securities and the Common Securities and investing the proceeds thereof in %
Junior Subordinated Debentures, Series A (QUIDS-SM-)* (the "Junior Subordinated
Debentures"), to be issued by ALH. The Junior Subordinated Debentures will
mature on , 2027, which date may be extended to a date not later
than , 2046 if certain conditions are met. The Preferred Securities
will have a preference under certain circumstances with respect to cash
distributions and amounts payable on liquidation, redemption or otherwise over
the Common Securities. See "Description of the Preferred
Securities--Subordination of Common Securities."

Holders of the Preferred Securities will be entitled to receive preferential
cumulative cash distributions accruing from the date of original issuance and
payable quarterly in arrears on the last day of March, June, September and
December of each year, commencing March 31, 1997, at the annual rate of % of
the liquidation amount of $25 per Preferred Security ("distributions"). ALH has
the right to defer payments of interest on the Junior

(CONTINUED ON NEXT PAGE)

SEE "RISK FACTORS" BEGINNING ON PAGE 15 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES.

-------------
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>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO THE
OFFERING PRICE COMMISSION(1) ISSUER(2)(3)
-------------- --------------- ----------------
<S> <C> <C> <C>
Per Preferred Security.............................................. $25.00 (2) $25.00
Total(4)............................................................ $75,000,000 (2) $75,000,000
</TABLE>

- ----------------
(1) The Issuer, ALH and AmerUs Life have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."

(2) In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures, the
Underwriting Agreement provides that ALH will pay to the Underwriters, as
compensation ("Underwriters' Compensation") for their arranging the
investment therein of such proceeds, $ per Preferred Security (or $ in
the aggregate). See "Underwriting."

(3) Expenses of the offering, which are payable by ALH, are estimated to be
$ .

(4) The Issuer has granted the Underwriters an option for 30 days to purchase up
to an additional 450,000 Preferred Securities at the initial public offering
price per Preferred Security, less the underwriting commission, solely to
cover over-allotments, if any. If such option is exercised in full, the
total initial public offering price and proceeds to the Issuer will be
$86,250,000 and $86,250,000, respectively, and the total Underwriters'
Compensation paid by ALH for arranging the investments will be $ . See
"Underwriting."

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

The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that the Preferred Securities will be ready for delivery in book-entry form only
through the facilities of DTC, on or about , 1997, against payment
therefor in immediately available funds.

- ----------------
* QUIPS and QUIDS are servicemarks of Goldman, Sachs & Co.

GOLDMAN, SACHS & CO.
---------

The date of this Prospectus is , 1997.

<PAGE>
IN CONNECTION WITH THIS PREFERRED OFFERING, THE UNDERWRITERS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
PREFERRED SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
--------------
(CONTINUED FROM PREVIOUS PAGE)

Subordinated Debentures, so long as no Event of Default (as defined herein) has
occurred and is continuing, by extending the interest payment period thereon at
any time or from time to time for up to 20 consecutive quarters with respect to
each deferral period (each an "Extension Period"), provided that no Extension
Period may extend beyond the Stated Maturity (as defined herein) of the Junior
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due, ALH may elect to begin a new Extension
Period subject to the requirements set forth herein. If interest payments are so
deferred, distributions on the Preferred Securities will also be deferred and
ALH will not be permitted to declare or pay any distributions with respect to
ALH's capital stock or make any payment on any debt securities of ALH that rank
pari passu with or junior to the Junior Subordinated Debentures or make any
guarantee payments with respect to any guarantee by ALH of the debt securities
of any subsidiary of ALH that rank pari passu with or junior to the Junior
Subordinated Debentures (other than (a) distributions in Common Stock of ALH,
(b) payments under the Guarantee (as defined herein), and (c) purchases of
Common Stock related to the issuance of Common Stock under any of ALH's benefit
plans for its directors, officers or employees). During an Extension Period,
distributions will continue to accrue, and holders of Preferred Securities will
be required to accrue interest income for United States federal income tax
purposes. See "Description of the Junior Subordinated Debentures--Option to
Extend Interest Payment Period" and "United States Federal Income
Taxation--Original Issue Discount."

ALH has, through the Guarantee, the Trust Agreement, the Preferred
Securities, the Indenture and the Expense Agreement (each as defined herein),
taken together, fully, irrevocably and unconditionally guaranteed all of the
Issuer's obligations under the Trust Securities. See "Relationship Among the
Preferred Securities, the Junior Subordinated Debentures and the Guarantee--Full
and Unconditional Guarantee." The Guarantee of ALH guarantees the payment of
distributions and payments on liquidation or redemption of the Preferred
Securities, but only in each case to the extent of funds held by the Issuer, as
described herein (the "Guarantee"). See "Description of the Guarantee." If ALH
does not make interest payments on the Junior Subordinated Debentures held by
the Issuer, the Issuer will have insufficient funds to pay distributions on the
Preferred Securities. The Guarantee does not cover payment of distributions when
the Issuer does not have sufficient funds to pay such distributions. In such
event, a holder of Preferred Securities may institute a legal proceeding
directly against ALH to enforce payment of such distributions to such holder.
See "Description of Junior Subordinated Debentures-- Debenture Events of Default
and Consequent Rights of Certain Holders--Rights of Holders of Preferred
Securities to Direct Action." ALH's obligations under the Guarantee and the
Junior Subordinated Debentures are subordinate and junior in right of payment to
all Senior Debt (as defined herein) of ALH.

The Preferred Securities are subject to mandatory redemption, in whole or in
part, upon repayment of the Junior Subordinated Debentures at maturity or their
earlier redemption at a redemption price of $25 per Preferred Security, plus
accrued and unpaid distributions thereon to the date fixed for redemption plus
the appropriate portion of any premium paid by ALH upon repayment of the Junior
Subordinated Debentures. See "Description of the Preferred
Securities--Redemption." ALH will have the option at any time on or after
, 2002 to redeem, in whole or in part, the Junior Subordinated
Debentures. In addition, ALH also will have the right at any time, upon
occurrence of a Special Event (as defined herein), to redeem, in whole but not
in part, the Junior Subordinated Debentures. See "Description of Junior
Subordinated Debentures--Optional Redemption."

2
<PAGE>

At any time, ALH will have the right to terminate the Issuer and cause the
Junior Subordinated Debentures to be distributed to the holders of the Preferred
Securities in liquidation of the Issuer. If ALH elects to liquidate the Issuer
and thereby causes the Junior Subordinated Debentures to be distributed to
holders of the Preferred Securities in liquidation of the Issuer, ALH shall have
the right to shorten or extend the maturity of such Junior Subordinated
Debentures, provided that it can extend the maturity only if at the time such
election is made and at the time of extension (i) ALH is not in bankruptcy,
otherwise insolvent or in liquidation, (ii) ALH is not in default in the payment
of any interest or principal on the Junior Subordinated Debentures and no
deferred interest payments thereon have accrued, (iii) the Issuer is not in
arrears on payments of distributions on the Preferred Securities and no deferred
distributions are accumulated, (iv) the Junior Subordinated Debentures are rated
not less than BBB- by Standard & Poor's or Baa3 by Moody's or the equivalent by
any other nationally recognized statistical rating organization and (v) the
extended Stated Maturity (as defined herein) is no later than the 49th
anniversary of the initial issuance of the Preferred Securities. ALH will seek
to have the Junior Subordinated Debentures rated by Standard & Poor's, Moody's
and/or another nationally recognized statistical rating organization in the
event of any extension. If ALH shortens or extends the maturity of the Junior
Subordinated Debentures, the Redemption Date for the Preferred Securities will
be similarly shortened or extended. See "Description of Preferred
Securities--Redemption."

The Junior Subordinated Debentures are subordinated and junior in right of
payment to all Senior Debt of ALH. After the completion of this Preferred
Offering and the Common Stock Offerings (as defined herein) and the repayment of
debt with the proceeds thereof, ALH will have approximately [$103.9] million
principal amount of indebtedness for borrowed money and capital lease
obligations constituting Senior Debt. The terms of the Junior Subordinated
Debentures do not limit ALH's ability to incur additional Senior Debt. ALH is a
non-operating holding company and substantially all of the operating assets of
ALH and its consolidated subsidiaries are owned by its subsidiary, AmerUs Life.
ALH relies primarily on the receipt of sufficient funds from AmerUs Life in the
form of dividends, interest payments or loans to meet its obligations for
payment of principal and interest on its outstanding debt obligations and
corporate expenses. Accordingly, the Junior Subordinated Debentures will be
effectively subordinated to all existing and future liabilities of ALH's
subsidiaries, and holders of Junior Subordinated Debentures should look only to
the assets of ALH for payments on the Junior Subordinated Debentures. The
payment of dividends by AmerUs Life is limited under the insurance laws of Iowa.
AmerUs Life has the ability to loan funds to ALH subject to certain regulatory
restrictions. See "Description of the Junior Subordinated
Debentures--Subordination."

In the event of the liquidation of the Issuer, the holders of the Preferred
Securities will be entitled to receive for each Preferred Security a Liquidation
Amount of $25 per Preferred Security plus accrued and unpaid distributions
thereon to the date of payment, subject to certain limitations. See "Description
of the Preferred Securities--Liquidation Distribution Upon Dissolution."

Application will be made to list the Preferred Securities on the New York
Stock Exchange (the "NYSE") under the symbol . Trading of the Preferred
Securities on the NYSE is expected to commence within a thirty-day period after
the initial delivery of the Preferred Securities. If the Junior Subordinated
Debentures are distributed to the holders of the Preferred Securities upon the
liquidation of the Issuer, ALH will use its reasonable efforts to list the
Junior Subordinated Debentures on the NYSE or such other stock exchanges or
other self-regulatory organizations, if any, on which the Preferred Securities
are then listed.

The Preferred Securities will be represented by global certificates
registered in the name of The Depository Trust Company ("DTC") or its nominee.
Beneficial interests in the Preferred Securities will be shown on, and transfers
thereof will be effected only through, records maintained by participants in
DTC. Except as described herein, Preferred Securities in certificated form will
not be issued in exchange for the global certificates. See "Description of
Preferred Securities--Book-Entry-Only Issuance--The Depository Trust Company."

3
<PAGE>
FOR NORTH CAROLINA RESIDENTS: THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS PREFERRED OFFERING NOR HAS
THE COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
--------------

AVAILABLE INFORMATION

The Trust and ALH have filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement on Form S-1 (together with all
amendments and exhibits thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Preferred Securities, the Junior Subordinated Debentures and the Guarantee. This
Prospectus, which forms a part of the Registration Statement, does not contain
all the information set forth in the Registration Statement, certain parts of
which have been omitted in accordance with the Rules and Regulations of the
Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete.
With respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. The Registration
Statement, including the exhibits and schedules filed therewith, may be examined
without charge at the public reference facilities maintained by the Commission
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's regional offices at Room 3190, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
13th Floor, New York, New York 10048. Copies of all or any part of the
Registration Statement may be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. 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.

ALH will be subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, will file reports and other information with the Commission. In
addition, the Trust and ALH intend to furnish to holders of Preferred Securities
annual reports containing consolidated financial statements of ALH certified by
an independent public accounting firm. Such reports and other information may be
inspected and copied at prescribed rates at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.

No separate financial statements of the Trust have been included herein. ALH
and the Trust do not consider such financial statements material to holders of
the Preferred Securities because the Trust is a newly formed special purpose
entity, has no operating history or independent operations and is not engaged
in, and does not propose to engage in, any activity other than its holding as
trust assets the Junior Subordinated Debentures of ALH and its issuance of the
Preferred Securities and Common Securities. See "The Issuer," "Description of
the Preferred Securities," "Description of the Guarantee" and "Description of
the Junior Subordinated Debentures." The Trust is a statutory business trust
formed under the laws of the State of Delaware. ALH, as of the date hereof,
beneficially owns all of the beneficial interests in the Trust. ALH's and the
Trust's principal executive offices are located at 418 Sixth Avenue, Des Moines,
Iowa 50309-2407, telephone number (515) 280-1331.

4
<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
"ALH" REFERS TO AMERUS LIFE HOLDINGS, INC., EXCLUDING ITS SUBSIDIARIES. THE TERM
"COMPANY" REFERS TO ALH 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

5
<PAGE>

REINSURANCE, of approximately $26.1 billion. As of September 30, 1996, the
Company had total assets of $4.3 billion and total shareholder's equity of $433
million (prior to the Common Stock Offerings and this Preferred Offering, 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 GENERAL 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.

6
<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.

7
<PAGE>
ORGANIZATIONAL STRUCTURE

The following chart illustrates the general organization of AMHC and its
subsidiaries, including the Company, after this Preferred Offering and the
Common Stock 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."

8
<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 ALH and approve matters
submitted for shareholder approval. Conflicts of interest between the Company
and AMHC may arise. See "Certain Transactions and Relationships."

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. ALH was formed on August 1, 1996, as of which date all of its shares of
capital stock were issued to AmerUs Group.

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 ALH. Under this structure, ALH 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 ALH. Immediately following the
Distribution, ALH 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"). ALH 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. ALH will use certain proceeds of the
Preferred Offering and the Common Stock Offerings (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."

9
<PAGE>
AMERUS CAPITAL I

AmerUs Capital I is a statutory business trust formed under Delaware law.
The Issuer exists for the exclusive purposes of (i) issuing the Preferred
Securities and Common Securities representing undivided beneficial interests in
the assets of the Issuer, (ii) investing the gross proceeds of the sale of the
Preferred Securities and Common Securities in the Junior Subordinated Debentures
and (iii) engaging in only those other activities necessary, convenient or
incidental thereto. All of the Common Securities, having an aggregate
liquidation amount equal to 3% of the total capital of the Issuer, will be owned
by ALH. The Common Securities will rank pari passu, and payments will be made
thereon pro rata, with the Preferred Securities, except that upon the occurrence
and continuance of an event of default under the Amended and Restated Trust
Agreement (the "Trust Agreement"), among ALH as Depositor, Wilmington Trust
Company as Property Trustee, and the Administrative Trustees named therein,
resulting from an event of default by ALH on the Junior Subordinated Debentures,
the rights of the holders of the Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Preferred Securities. The
Property Trustee and Administrative Trustees are referred to herein,
collectively, as the "Trustees." Subject to the right of holders of a majority
in Liquidation Amount of the outstanding Preferred Securities to appoint a
substitute Property Trustee upon the occurrence of certain events described
herein, ALH, as owner of all of the Common Securities, has the exclusive right
(subject to the provisions of the Trust Agreement) to appoint, remove or replace
the Property Trustee, the duties and obligations of which will be governed by
the Trust Agreement. ALH will pay all fees and expenses related to the Issuer
and the offering of the Preferred Securities (as defined below).

THE PREFERRED OFFERING

<TABLE>
<CAPTION>
Issuer.............................. AmerUs Capital I
<S> <C>
Securities Offered.................. $75,000,000 of % Cumulative Quarterly Income
Preferred Securities.
Ownership........................... The ownership interests in the Trust will be
evidenced by (i) a class of Preferred Securities
representing approximately 97% of the ownership
interests in the Trust and (ii) a class of Common
Securities (together with the Preferred Securities,
the "Trust Securities") representing approximately 3%
of the ownership interests in the Trust.
Maturity of the Junior Subordinated
Debentures......................... , 2027, but the maturity date may be extended for up
to an additional 19 years at the option of ALH,
provided certain conditions are met (such date, as it
may be extended, the "Stated Maturity"). The
Preferred Securities are mandatorily redeemable upon
the maturity or earlier redemption of the Junior
Subordinated Debentures.
Distribution Payment Dates.......... The last day of March, June, September and December,
commencing March 31, 1997.
</TABLE>

10
<PAGE>

<TABLE>
<S> <C>
Extension of Interest Payment ALH will have the right to extend the interest
Period............................. payment period on the Junior Subordinated Debentures,
so long as no Event of Default has occurred and is
continuing, for up to 20 consecutive quarters (each,
an "Extension Period"), and, as a consequence during
this period, quarterly distributions on the Preferred
Securities would be deferred (but will continue to
accrue with interest). During an Extension Period,
neither ALH nor any of its subsidiaries shall (i)
declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation
payment with respect to, any of ALH's outstanding
capital stock or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase
or redeem any debt securities of ALH that rank pari
passu with or junior to the Junior Subordinated
Debentures or make any guarantee payments with
respect to any guarantee by ALH of the debt
securities of any subsidiary of ALH that rank pari
passu with or junior to the Junior Subordinated
Debentures (other than (a) dividends or distributions
in Common Stock of ALH (b) payments under the
Guarantee and (c) purchases of Common Stock related
to the issuance of Common Stock under any of ALH's
benefit plans for directors, officers or employees).
This deferral feature cannot be used to extend the
maturity of the Junior Subordinated Debentures.
Guarantee........................... Taken together, ALH's obligations under the Junior
Subordinated Debentures, the Indenture, the Trust
Agreement, the Expense Agreement and the Guarantee
provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of distributions
and other amounts due on the Preferred Securities. No
single document standing alone or operating in
conjunction with fewer than all the other documents
constitutes such guarantee.
Mandatory Redemption................ The Preferred Securities are subject to mandatory
redemption upon repayment of the Junior Subordinated
Debentures at maturity or their earlier redemption.
ALH will have the option at any time on or after
, 2002, to redeem, in whole or in part,
the Junior Subordinated Debentures, at par, plus
accrued and unpaid interest, if any, through the
redemption date. ALH will also have the right at any
time, upon the occurrence of a Special Event (as de-
fined herein), to redeem, in whole but not in part,
the Junior Subordinated Debentures.
Liquidation Amount.................. $25.00 per Preferred Security (the "Liquidation
Amount").
</TABLE>

11
<PAGE>

<TABLE>
<S> <C>
Subordination of Common Income distributions, payments of redemption prices
Securities......................... and amounts distributed in connection with the
liquidation of the Trust will be made pari passu
among holders of Preferred Securities and ALH, as
holder of the Common Securities, except that, in the
event of a default by ALH on the Junior Subordinated
Debentures, (i) full income distributions and
payments of redemption prices will be made on the
Preferred Securities before further income
distributions or payments of redemption prices are
made on the Common Securities, and (ii) the full
liquidation preference will be paid on the Preferred
Securities in the event of a liquidation of the Trust
before any liquidating distribution is made on the
Common Securities.
Use of Proceeds..................... All of the proceeds from the sale of Preferred
Securities will be invested by the Trust in the
Junior Subordinated Debentures. ALH will use the
proceeds from issuance of the Junior Subordinated
Debentures to repay debt which is outstanding under
to the Bank Credit Facility.
Listing............................. The Issuer intends to have the Preferred Securities
approved for listing on the New York Stock Exchange
under the symbol .
</TABLE>

12
<PAGE>
THE COMMON STOCK OFFERINGS

Up to five million shares of Class A Common Stock of ALH are being offered
by ALH and the Selling Shareholder in a subscription offering (the "Subscription
Offering") in accordance with priority subscription rights provided under the
Plan to eligible policyowners of AmerUs Life as of June 30, 1996. The
Subscription Offering commenced on December 13, 1996. ALH and the Selling
Shareholder intend to offer all or a portion of the shares of Class A Common
Stock not subscribed for in the Subscription Offering to the public in an
underwritten public offering (the "Public Offering," and together with the
Subscription Offering, the "Common Stock Offerings"). The consummation of the
Common Stock Offerings is not conditioned upon completion of this Preferred
Offering and, although it is currently ALH's and the Selling Shareholder's
intention to complete the Common Stock Offerings prior to or contemporaneously
with this Preferred Offering, there can be no assurance that the Common Stock
Offerings will be completed prior to the completion of this Preferred Offering.
See "The Common Stock Offerings."

SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

The summary consolidated financial data below for the nine months ended
September 30, 1996 and 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 the nine
months ended September 30, 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 September 30, 1996 and December 31, 1995 and
1994, and for the nine months ended September 30, 1996 and 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, 1995 and for the nine months ended
September 30, 1995 and (iv) other financial data included elsewhere in this
Prospectus.

13
<PAGE>

<TABLE>
<CAPTION>
AS OF OR FOR THE
NINE MONTHS ENDED AS OF OR FOR THE YEAR ENDED DECEMBER 31,(A)
SEPTEMBER 30,
-------------------- -----------------------------------------------------
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.................................. 78.8 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....................... 328.0 396.9 532.9 526.3 515.8 476.9 456.3
--------- --------- --------- --------- --------- --------- ---------

Income before income taxes........................ 101.6 83.9 110.5 26.1 55.8 57.3 69.3
Income tax expense................................ 38.7 29.9 41.2 19.4 21.4 18.6 24.5
--------- --------- --------- --------- --------- --------- ---------
Income before cumulative effect of a change in
accounting principles............................ 62.9 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........................................ $ 62.9 $ 54.0 $ 69.3 $ 6.7 $ 31.2 $ 38.7 $ 44.8
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Earnings per share (C)............................ $ 2.86 $ -- $ 3.15 $ -- $ -- $ -- $ --

CONSOLIDATED BALANCE SHEET DATA:
Total invested assets............................. $ 2,810.2 $ 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................................. 3,779.4 3,760.5 3,832.0 3,618.6 3,524.8 3,286.4 3,195.6
Total shareholder's equity (B)(D)................. 512.4 488.3 539.9 418.3 505.9 421.2 376.9

OTHER OPERATING DATA:
Cash flows from operating activities.............. $ 85.3 $ 128.4 $ 202.0 $ 172.4 $ 173.6 $ 101.5 $ 155.7
Cash flows from investing activities.............. 5.8 (95.0) (148.3) (134.9) (192.1) (99.6) (175.2)
Cash flows from financing activities.............. (95.8) (56.5) (72.5) (24.8) 14.5 9.2 19.1

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 (E)................................... 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) The Capital Contribution would have the effect of reducing total
shareholder's equity as of September 30, 1996 and the year ended December
31, 1995 by $79 million.

(C) Retroactively reflects the pro forma effect of the issuance of 17.0 million
shares of Class A Common Stock and 5.0 million shares of Class B Common
Stock at the beginning of the respective periods and gives retroactive
effect to the Capital Contribution.

(D) 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.

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

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 PREFERRED SECURITIES.

RISK FACTORS RELATING TO THE PREFERRED SECURITIES:

SUBORDINATION OF THE GUARANTEE AND THE JUNIOR SUBORDINATED DEBENTURES

ALH's obligations under the Guarantee and under the Junior Subordinated
Debentures are unsecured and rank subordinate and junior in right of payment to
all present and future Senior Debt of ALH and pari passu with obligations to or
rights of ALH's other general unsecured creditors. ALH is a non-operating
holding company and substantially all of the operating assets of ALH and its
consolidated subsidiaries are owned by its subsidiary, AmerUs Life. ALH relies
primarily on the receipt of sufficient funds from AmerUs Life in the form of
dividends, interest payments or loans to meet its obligations for payment of
principal and interest on its outstanding debt obligations and corporate
expenses. Accordingly, the Junior Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of ALH's subsidiaries, and
holders of Junior Subordinated Debentures should look only to the assets of ALH
for payments on the Junior Subordinated Debentures. The payment of dividends by
AmerUs Life is limited under the insurance laws of Iowa. 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 approximately $120 million
without prior regulatory approval. See "Supervision and Regulation--Regulation
of AmerUs Life." There are no terms in the Preferred Securities, the Junior
Subordinated Debentures or the Guarantee that limit ALH's ability to incur
additional indebtedness, including Senior Debt. After the completion of this
Preferred Offering and the Common Stock Offerings and the repayment of debt with
the proceeds thereof, ALH will have approximately $104 million of principal
amount of indebtedness for borrowed money and capital lease obligations
constituting Senior Debt. ALH expects from time to time to incur additional
indebtedness constituting Senior Debt. See "Description of the Guarantee--Status
of the Guarantee" and "Description of the Junior Subordinated Debentures--
Subordination."

The ability of the Issuer to pay amounts due on the Preferred Securities is
solely dependent upon ALH making payments on the Junior Subordinated Debentures
as and when required.

LIMITED RIGHTS UNDER THE GUARANTEE

The Guarantee will be qualified as an indenture under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"). The Property Trustee
(herein sometimes called the "Trustee") will act as indenture trustee under the
Guarantee for the purposes of compliance with the Trust Indenture Act and to
hold the Guarantee for the benefit of the holders of the Trust Securities. The
Guarantee guarantees to the holders of the Preferred Securities the payment (but
not the collection) of (i) any accrued and unpaid distributions that are
required to be paid on the Preferred Securities, to the extent the Trust has
funds available therefor at such time, (ii) the redemption price of $25 per
Preferred Security, including all accrued and unpaid distributions with respect
to Preferred Securities called for redemption by the Trust, to the extent the
Trust has funds available therefor at such time and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Trust (other than in
connection with the distribution of Junior Subordinated Debentures to the
holders of Preferred Securities or a redemption of all the Preferred
Securities), the lesser of (a) the aggregate of the Liquidation Amount and all
accrued and unpaid distributions on the Preferred Securities to the date of the
payment to the extent the Trust has funds available therefor at such time and
(b) the amount of assets of the Trust remaining available for distribution to
holders of the Trust Securities in liquidation of the Trust. The holders of not
less than a majority in aggregate Liquidation Amount of the Preferred Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred upon the Trustee under the Guarantee. Any holder of the Preferred
Securities may institute a legal proceeding directly against ALH to enforce the
holder's rights under the Guarantee without first instituting a legal proceeding
against the Issuer, the Guarantee Trustee or any other person or entity. If ALH
were to default on its obligation to pay amounts payable under the Junior

15
<PAGE>

Subordinated Debentures, the Issuer would lack funds for the payment of
distributions or amounts payable on redemption of the Preferred Securities or
otherwise, and, in such event, holders of the Preferred Securities would not be
able to rely upon the Guarantee for payment of such amounts. Instead, in the
event an Event of Default under the Indenture shall have occurred and be
continuing and such event is attributable to the failure of ALH for 30 days to
pay interest on or the failure of ALH to pay principal on the Junior
Subordinated Debentures when due and payable, then a holder of Preferred
Securities may, pursuant to the terms of the Indenture and in addition to its
rights under the Guarantee, institute a legal proceeding directly against ALH
for enforcement of payment to such holder of the principal of and interest on
such Junior Subordinated Debentures having a principal amount equal to the
aggregate Liquidation Amount of the Preferred Securities of such holder (a
"Direct Action"). Except as set forth herein, holders of the Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of the Junior Subordinated Debentures or assert directly any other
rights in respect of the Junior Subordinated Debentures. See "Description of
Junior Subordinated Debentures-- Debenture Events of Default and Consequent
Rights of Certain Holders--Rights of Holders of Preferred Securities to Direct
Action," "Description of the Junior Subordinated Debentures--Events of Default"
and "Description of the Guarantee." The Trust Agreement provides that each
holder of Preferred Securities by acceptance thereof agrees to the provisions of
the Guarantee and the Indenture.

ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
AND THE TRUSTEE; LIMITED VOTING RIGHTS

If the Trustee or a holder of Preferred Securities obtains a judgment
against ALH following the occurrence of an Event of Default under the Indenture,
the provisions of Iowa law regulating mutual insurance holding companies would
limit the ability of the Trustee to realize upon the assets of ALH by conveying
or transferring the capital stock of AmerUs Life owned by ALH. Any conveyance,
transfer, assignment or alienation of a majority of the voting shares of AmerUs
Life to an entity which is not a mutual insurance holding company would violate
Iowa law and such voting shares are not subject to execution and levy. The
Trustee would not be restricted by such law in disposing of voting shares owned
by ALH which exceeded such majority requirement. See "The Reorganization and
Distribution of the Non-Life Insurance Subsidiaries--Regulation of AMHC after
the Reorganization."

Holders of Preferred Securities will have generally limited voting rights
relating only to the conduct of proceedings for remedies available to the
Debenture Trustee, waiver of certain defaults, rescission of any declaration of
acceleration and certain modifications of the Preferred Securities. Holders of
Preferred Securities will not be entitled to vote to appoint, remove or replace
the Property Trustee, which voting rights are vested exclusively in the holder
of the Common Securities, except upon the occurrence of certain events described
herein. The Property Trustee, the Administrative Trustees and ALH may amend the
Trust Agreement without the consent of holders of Preferred Securities to ensure
that the Issuer will be classified for United States federal income tax purposes
as a grantor trust or to ensure that the Issuer will not be required to register
as an "investment company" under the Investment Company Act, even if such action
adversely affects the interests of such holders. See "Description of the
Preferred Securities--Voting Rights."

POSSIBLE RECOGNITION OF INCOME BEFORE RECEIPT OF CASH

ALH intends to treat the Junior Subordinated Debentures as having been
issued with original issue discount ("OID") for United States federal income tax
purposes. Because each holder of Preferred Securities will generally be
considered the owner of an undivided interest in the Junior Subordinated
Debentures for such purposes, a holder will be required to include in its gross
income any OID accrued with respect to its allocable share of those Junior
Subordinated Debentures. See "United States Federal Income Taxation--Original
Issue Discount." As a result, holders using the cash method of accounting for
United States federal income tax purposes may be required, in certain
circumstances, to recognize income before the receipt of cash with respect to
such income. See "--Option to Extend Interest Payment Period; Tax Consequences"
and "--Trading Price of the Preferred Securiites May Not Fully Reflect Value of
Unpaid Interest."

16
<PAGE>
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES

So long as no Event of Default has occurred and is continuing, ALH has the
right under the Indenture to defer payments of interest on the Junior
Subordinated Debentures by extending the interest payment period at any time,
and from time to time, on the Junior Subordinated Debentures for a period not
exceeding 20 consecutive quarters with respect to each deferred period (each an
"Extension Period"), provided that no Extension Period may extend beyond the
Stated Maturity of the Preferred Securities. As a consequence of such an
extension, quarterly distributions on the Preferred Securities would be deferred
by the Trust during any such Extension Period (but despite such deferral would
continue to accrue with interest thereon compounded quarterly). In the event
that ALH exercises this right to defer interest payments, then ALH shall not,
and shall cause any subsidiary of ALH not to, (a) declare or pay dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of ALH's capital stock or (b) make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities of ALH that rank pari passu with or junior to the Junior Subordinated
Debentures or make any guarantee payments with respect to any guarantee by ALH
of the debt securities of any subsidiary of ALH that by their terms rank pari
passu with or junior to the Junior Subordinated Debentures (other than (a)
dividends or distributions in Common Stock of ALH (b) payments under the
Guarantee, and (c) purchases of Common Stock related to the issuance of Common
Stock under any of ALH's benefit plans for its directors, officers or
employees). Prior to the termination of any such Extension Period, ALH may
further extend the interest payment period, provided that such Extension Period,
together with all such previous and further extensions thereof, shall not exceed
20 consecutive quarters or extend beyond the Stated Maturity of the Junior
Subordinated Debentures. Upon the termination of any Extension Period and the
payment of all amounts then due, ALH may commence a new Extension Period,
subject to the above requirements. There is no limitation on the number of times
that ALH may elect to begin an Extension Period. See "Description of the
Preferred Securities--Distributions" and "Description of the Junior Subordinated
Debentures--Option to Extend Interest Payment Period."

Should ALH exercise its right to defer payments of interest by extending the
interest payment period, each holder of Preferred Securities will continue to
include the deferred interest in income (as original issue discount) for United
States federal income tax purposes, even though no current cash distribution
will be made in respect of such income. In addition, each such holder of
Preferred Securities will not receive the cash from the Trust related to such
income if such holder disposes of its Preferred Securities prior to the record
date for distributions of such amounts. See "United States Federal Income
Taxation--Original Issue Discount." ALH has no present intention of exercising
its right to defer payments of interest by extending the interest payment period
on the Junior Subordinated Debentures. However, should ALH determine to exercise
such right in the future, the market price of the Preferred Securities is likely
to be affected. A holder that disposes of its Preferred Securities during an
Extension Period, therefore, might not receive the same return on its investment
as a holder that continues to hold its Preferred Securities. In addition, as a
result of the existence of ALH's right to defer interest payments, the market
price of the Preferred Securities (which represent an undivided beneficial
interest in the Junior Subordinated Debentures) may be more volatile than other
securities on which original issue discount accrues that are not subject to such
deferrals.

SPECIAL EVENT REDEMPTION OR EXCHANGE

Upon the occurrence and continuance of a Special Event (as defined herein),
ALH shall have the right to redeem the Junior Subordinated Debentures, in whole
but not in part within 90 days following the occurrence of such Special Event
and therefore cause a mandatory redemption of the Preferred Securities at the
redemption price. If a Special Event were to occur, there can be no assurance
that ALH would have sufficient funds to effectuate an optional redemption of the
Junior Subordinated Debentures and pay the Redemption Price. ALH's ability to
exercise its option to redeem the Junior Subordinated Debentures may be limited
by the terms of its then-existing borrowing and other agreements. "Special
Event" means either an Investment Company Event or a Tax Event. An Investment
Company Event means the receipt by the Issuer of an opinion of counsel
experienced in such matters to the effect that, as

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<PAGE>

a result of the occurrence of a change in law or regulation or change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
the Issuer is or will be considered an investment company that is required to be
registered under the Investment Company Act of 1940, as amended, which Change in
1940 Act Law becomes effective on or after the date of original issuance of the
Preferred Securities. A Tax Event means the receipt by the Issuer of an opinion
of counsel experienced in such matters to the effect that, as a result of (a)
any amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein affecting taxation, or (b)
any amendment to, or change in, an interpretation or application of such laws or
regulations by any legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and the publication of any
judicial decision or regulatory determination on or after the date of issuance
of the Preferred Securities), there is more than an insubstantial risk that (i)
the Issuer is, or will be within 90 days of the date of such opinion, subject to
United States federal income tax with respect to income received or accrued on
the Junior Subordinated Debentures, (ii) interest payable by ALH on the Junior
Subordinated Debentures is not, or within 90 days of the date of such opinion,
will not be, deductible by ALH, in whole or in part, for United States federal
income tax purposes, or (iii) the Issuer is, or will be within 90 days of the
date of such opinion, subject to more than a de minimis amount of other taxes,
duties or other governmental charges. See "Description of the Preferred
Securities--Redemption--Special Event Redemption or Distribution of Junior
Subordinated Debentures."

At any time, ALH has the right to terminate the Issuer and, after
satisfaction of the liabilities of creditors of the Issuer as provided by
applicable laws, cause the Junior Subordinated Debentures to be distributed to
the holders of the Preferred Securities, in connection with the liquidation of
the Trust.

TAX CONSEQUENCES

The receipt of cash by the holders of the Preferred Securities upon a
termination of the Trust would be a taxable event to such holders. Under current
United States federal income tax law, a distribution of Junior Subordinated
Debentures upon the termination of the Trust would not be a taxable event to
holders of the Preferred Securities. See "United States Federal Income
Taxation--Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of
the Trust."

EFFECT ON MARKET PRICES

There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a termination or liquidation of the Trust
were to occur. Accordingly, the Preferred Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Junior Subordinated Debentures that a holder of Preferred Securities may
receive on termination and liquidation of the Trust, may trade at a discount to
the price that the investor paid to purchase the Preferred Securities offered
hereby.

POSSIBLE CHANGE IN MATURITY OF THE JUNIOR SUBORDINATED DEBENTURES

In addition, because ALH has the right to shorten or extend the maturity of
the Junior Subordinated Debentures upon a termination of the Issuer and the
distribution of the Junior Subordinated Debentures to holders of Preferred
Securities, there can be no assurance that ALH will not exercise its option to
change the maturity of the Junior Subordinated Debentures upon an exchange. If
ALH exercises its option to shorten the maturity of the Junior Subordinated
Debentures upon an exchange, the holders of the Preferred Securities bear the
risk that they will not be able to reinvest the funds received upon early
redemption at a rate of return as favorable as that received under the Preferred
Securities and the Junior Subordinated Debentures.

CORRESPONDING INVESTMENT DECISION IN JUNIOR SUBORDINATED DEBENTURES

Because holders of Preferred Securities may receive Junior Subordinated
Debentures in connection with a liquidation of the Trust, prospective purchasers
of Preferred Securities are also making an investment decision with regard to
the Junior Subordinated Debentures and should carefully review all

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<PAGE>

the information regarding the Junior Subordinated Debentures contained herein.
See "Description of the Preferred Securities--Liquidation Distribution upon
Termination" and "Description of the Junior Subordinated Debentures."

POSSIBLE TAX LAW CHANGES AFFECTING THE PREFERRED SECURITIES

On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill") was
released, which would, among other things, generally deny interest deductions
for United States federal income tax purposes for interest on an instrument,
issued by a corporation, that has a maximum weighted average maturity of more
than 40 years. The Bill would also generally deny interest deductions for
interest on an instrument, issued by a corporation, that has a maximum term of
more than 20 years and that is not shown as indebtedness on the separate balance
sheet of the issuer or, where the instrument is issued to a related party (other
than a corporation), where the holder or some other related party issues a
related instrument that is not shown as indebtedness on the issuer's
consolidated balance sheet. The above-described provisions of the Bill were
proposed to be effective generally for debt instruments issued on or after
December 7, 1995. If either provision were to apply to the Junior Subordinated
Debentures, ALH would be unable to deduct interest on the Junior Subordinated
Debentures for United States federal income tax purposes. However, on March 29,
1996, the Chairmen of the Senate Finance and House Ways and Means Committees
issued a joint statement to the effect that it was their intention that the
effective date of the President's legislative proposals, if adopted, will be no
earlier than the date of appropriate Congressional action. ALH believes that,
under current law, it will be able to deduct interest on the Junior Subordinated
Debentures. There can be no assurance, however, that current or future
legislative proposals or final legislation will not affect the ability of ALH to
deduct interest on the Junior Subordinated Debentures. Such a change could give
rise to a Tax Event, which may permit ALH to cause a redemption of the Preferred
Securities. See "Description of the Preferred Securities--Redemption--Special
Event Redemption or Distribution" and "United States Federal Income
Taxation--Possible Tax Law Changes."

TRADING PRICE OF THE PREFERRED SECURITIES MAY NOT FULLY REFLECT VALUE OF UNPAID
INTEREST

The Preferred Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A holder who disposes of his Preferred Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the Junior Subordinated Debentures
through the date of disposition in income as ordinary income (i.e., original
issue discount), and to add such amount to his adjusted tax basis in his pro
rata share of the underlying Junior Subordinated Debentures deemed disposed of.
To the extent that the selling price is less than the holder's adjusted tax
basis, a holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes. See "United States Federal Income
Taxation-- Original Issue Discount" and "--Sales of Preferred Securities."

As indicated above, it is anticipated that the Preferred Securities will be
listed for trading on the New York Stock Exchange. If the Preferred Securities
are not listed on a national securities exchange or the Nasdaq National Market
and the Underwriters do not make a market for the securities, the liquidity of
the Preferred Securities could be adversely affected.

RISK FACTORS RELATING TO THE COMPANY:

HOLDING COMPANY STRUCTURE; LIMITATIONS ON DIVIDENDS

ALH is an insurance holding company whose assets consist primarily of all of
the outstanding shares of common stock of AmerUs Life. ALH'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, interest payments or
loans. The payment of dividends by AmerUs Life to ALH 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.

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<PAGE>

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 ALH 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 ALH in the future in an amount sufficient for ALH
to pay dividends to its shareholders and meet its other obligations could have a
material adverse effect on ALH and its ability to meet its obligations. See
"Supervision and Regulation."

Under the Bank Credit Facility, ALH has pledged to the lenders thereunder
approximately 49.9% of the common stock of AmerUs Life owned by ALH and a $50
million 9% surplus note payable to ALH by AmerUs Life. See "Certain Transactions
and Relationships--Security Arrangements for Bank Credit Facility."

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, as well as rules adopted by the Office of the
Comptroller of the Currency, have significantly expanded the authority of
national banks to engage in the insurance business, including the sale of life
insurance products and annuities.

In addition, 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.

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."

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<PAGE>
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 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 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 has 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

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<PAGE>

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 ALH in the Common Stock 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. Although AmerUs Life has denied all allegations against it and
has vigorously defended against such litigation, 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. AmerUs Life is currently in the
process of negotiating a potential class settlement with respect to certain of
such actions, and has taken a charge to income for the first nine months of 1996
in connection therewith. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition--Nine Months Ended September 30, 1996
Compared to Nine Months Ended September 30, 1995" and "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
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

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<PAGE>
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."

THE COMPANY

ALH 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, ALH'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 shareholder's equity of $433
million (prior to the Common Stock Offerings, after giving effect to the Capital
Contribution).

ALH's executive offices are located at 418 Sixth Avenue, Des Moines, Iowa
50309-2407, and its telephone number is (515) 280-1331.

THE ISSUER

The Issuer is a statutory business trust formed under Delaware law pursuant
to (i) a trust agreement executed by ALH as Depositor, and the Property Trustee
of the Issuer and (ii) the filing of a certificate of trust with the Delaware
Secretary of State. The trust agreement will be amended and restated in its
entirety (as so amended and restated, the "Trust Agreement") substantially in
the form filed as an exhibit to the Registration Statement of which this
prospectus forms a part. The Trust Agreement will be qualified

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<PAGE>

as an indenture under the Trust Indenture Act. The Issuer exists for the
exclusive purposes of (i) issuing and selling the Preferred Securities and the
Common Securities, (ii) using the proceeds from the sale of the Preferred
Securities and the Common Securities to acquire the Junior Subordinated
Debentures issued by ALH, and (iii) engaging in only those other activities
necessary, convenient or incidental thereto. Accordingly, the Junior
Subordinated Debentures, the rights of the Property Trustee under the Guarantee
and the right to reimbursement of expenses under the Expense Agreement will be
the sole assets of the Issuer, and payments under the Junior Subordinated
Debentures and the Expense Agreement will be the sole revenue of the Issuer.

All of the Common Securities of the Issuer will be owned by ALH. The Common
Securities will rank pari passu, and payments will be made thereon pro rata,
with the Preferred Securities, except that upon the occurrence and continuance
of an Event of Default under the Trust Agreement (as defined therein) resulting
from an Event of Default under the Indenture, the rights of ALH as holder of the
Common Securities to payment in respect of distributions and payments upon
liquidation, redemption or otherwise will be subordinated to the rights of the
holders of the Preferred Securities. See "Description of the Preferred
Securities--Subordination of Common Securities." ALH will acquire Common
Securities in aggregate liquidation amount equal to 3% of the total capital of
the Issuer.

The Issuer has a term of approximately 55 years, but may terminate earlier
as provided in the Trust Agreement. The Issuer's business and affairs are
conducted by its trustees, each appointed by ALH as holder of the Common
Securities. The trustees for the Issuer will be Wilmington Trust Company, as the
Property Trustee, and three individual Administrative Trustees who are employees
or officers of or affiliated with ALH. Wilmington Trust Company, as Property
Trustee, will act as sole indenture trustee under the Trust Agreement for
purposes of compliance with the Trust Indenture Act. Wilmington Trust Company
will also act as trustee under the Guarantee and the Indenture (each as defined
herein). See "Description of the Guarantee" and "Description of the Junior
Subordinated Debentures." The holder of the Common Securities of the Issuer, or
the holders of a majority in Liquidation Amount of the Preferred Securities if
an Event of Default under the Indenture has occurred and is continuing, will be
entitled to appoint, remove or replace the Property Trustee. In no event will
the holders of the Preferred Securities have the right to vote to appoint,
remove or replace the Administrative Trustees; such voting rights are vested
exclusively in the holder of the Common Securities. The duties and obligations
of the Property Trustee are governed by the Trust Agreement. ALH will pay all
fees and expenses related to the Issuer and the offering of the Preferred
Securities and will pay, directly or indirectly, all ongoing costs, expenses and
liabilities of the Issuer.

The principal executive office of the Issuer is located at 418 Sixth Avenue,
Des Moines, Iowa 50309-2407 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").

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<PAGE>

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
ALH. Under this structure, ALH 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 ALH.

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 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
following the Distribution, ALH borrowed $100 million in term debt and $75
million under a revolving line of credit pursuant to the Bank Credit Facility.
ALH 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
AmerUsLife. 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 Common Stock 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 ALH 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.

25
<PAGE>

Pursuant to ALH's Articles of Incorporation, upon a demutualization all of ALH'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.

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

26
<PAGE>
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 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.

27
<PAGE>
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.

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 (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,
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 Common
Stock 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 dividend
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.

28
<PAGE>
THE COMMON STOCK OFFERINGS

Up to five million shares of Class A Common Stock of ALH are being offered
by ALH 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 (the effective date of the
Reorganization). The Subscription Offering commenced on December 13, 1996. ALH
and the Selling Shareholder intend to offer in the Public Offering all or a
portion of the shares of Class A Common Stock not subscribed for in the
Subscription Offering. The consummation of the Common Stock Offerings is not
conditioned upon completion of this Preferred Offering and, although it is
currently ALH's and the Selling Shareholder's intention to complete the Common
Stock Offerings prior to or contemporaneously with this Preferred Offering,
there can be no assurance that the Common Stock Offerings will be completed
prior to the completion of this Preferred Offering.

Assuming that the price for the Class A Common Stock in the Public Offering
(or the revised subscription price if the Public Offering is not consummated) is
equal to $15.50 per share, the net proceeds to ALH from the Common Stock
Offerings are expected to be approximately $35 million after deducting ALH's
share of the estimated expenses of such offerings. All such estimated proceeds
will be used by ALH to repay a portion of the term debt under the Bank Credit
Facility. The term debt will be due over the next five years and will bear
interest at a variable rate, which rate was approximately % as of the date of
this Prospectus. The term debt to be repaid was incurred in December, 1996 and
the proceeds of such debt were advanced to AmerUs Life in the form of a capital
contribution to replace capital which was distributed by AmerUs Life pursuant to
the Distribution. ALH will not receive any proceeds from the sale of Class A
Common Stock by the Selling Shareholder. See "Capitalization" and "Use of
Proceeds."

ALH currently estimates the net proceeds to be received from this Preferred
Offering to be $72.4 million, after giving effect to the underwriting discount
and estimated offering expenses of ALH. It is expected that ALH will use such
proceeds to repay a portion of the revolving debt under the Bank Credit
Facility. The revolving line of credit matures in November, 2001 and will bear
interest at a variable rate, which rate was approximately % as of the date of
this Prospectus. See "The Preferred Offering" and "Management's Discussion and
Analysis of Results of Operation and Financial Condition--Liquidity and Capital
Resources."

RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS

The following table sets forth the Company's ratios and pro forma ratios of
earnings to combined fixed charges and preferred stock dividends for the years
and periods indicated:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
NINE MONTHS ENDED
SEPTEMBER 30, 1996 1995
---------------------------- --------------------------------
HISTORICAL PRO FORMA(2) HISTORICAL PRO FORMA(2) 1994 1993
----------- --------------- ------------- ----------------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to combined
fixed charges and preferred stock
dividends (1) (3)................... 89.04 8.67 47.92 7.27 5.82 8.98

1992 1991
----- ---------
<S> <C> <C>
Ratio of earnings to combined
fixed charges and preferred stock
dividends (1) (3)................... 6.44 6.58
</TABLE>

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

(1) For purposes of computing the ratio of earnings to combined fixed charges
and preferred stock dividends, "earnings" consists of income from operations
before Federal income taxes, fixed charges and pre-tax earnings required to
cover preferred stock dividend requirements. "Fixed charges" consist of
interest expense on debt and amortization of debt expense.

(2) Pro forma amounts include adjustments for the net increase in preferred
stock dividends resulting from the proposed issuance of preferred stock,
assuming a 9% dividend, and the corresponding retirement of debt with the
proceeds from the Preferred Offering. In addition, pro forma amounts include
the effects of the Capital Contribution, Common Stock Offerings and
establishment of the Bank Credit Facility, all of which are being
accomplished or are in process in the current period and, therefore, are not
accounted for in the historical numbers. See "Unaudited Pro Forma Condensed
Consolidated Financial Statements."

(3) ALH gurantees the payment of a pool of mortgage loans previously sold to an
unrelated party. Since ALH has not been required to satisfy the guarantee,
no amount has been included in fixed charges for such guarantee. The
interest expense related to this mortgage pool was $0.9 million for the nine
months ended September 30, 1996 and $1.3 million for the year ended December
31, 1995.

29
<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 Common Stock 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 Debentures 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" and
"The Common Stock Offerings." 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
THE CAPITAL
PRO FORMA CONTRIBUTIONS,
ADJUSTMENTS FOR PRO FORMA FOR PRO FORMA AS ADJUSTED FOR
THE CAPITAL THE CAPITAL ADJUSTMENTS FOR THE COMMON
CONTRIBUTION AND CONTRIBUTION THE COMMON STOCK OFFERINGS
THE BANK CREDIT AND THE BANK STOCK AND THE BANK
HISTORICAL FACILITY(A) CREDIT FACILITY OFFERINGS(B) CREDIT FACILITY
----------- ----------------- --------------- --------------- ---------------
(IN MILLIONS)

<S> <C> <C> <C> <C> <C>
Long Term Debt.................................. $ 45.1 $ 166.3 $ 211.4 $ (35.0) $ 176.4
----------- ------- ------- ------ -------
Company-obligated mandatorily redeemable
Preferred Securities of subsidiary trust
holding solely junior subordinated debentures
of the Company(C).............................. -- -- -- -- --
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............................. 470.2 (79.0) 391.2 -- 391.2
Unrealized appreciation of invested assets,
net.......................................... 22.7 -- 22.7 -- 22.7
----------- ------- ------- ------ -------
Total equity................................ 512.4 (79.0) 433.4 35.0 468.4
----------- ------- ------- ------ -------
Total capitalization............................ $ 557.5 $ 87.3 $ 644.8 -- $ 644.8
----------- ------- ------- ------ -------
----------- ------- ------- ------ -------

PRO FORMA FOR
THE CAPITAL
CONTRIBUTION,
AS ADJUSTED FOR
THE COMMON
STOCK
OFFERINGS, THE
PRO FORMA BANK CREDIT
ADJUSTMENTS FOR FACILITY AND
THE PREFERRED THE PREFERRED
OFFERING(C) OFFERING
--------------- ---------------

<S> <C> <C>
Long Term Debt.................................. $ (72.4) $ 104.0
------ -------
Company-obligated mandatorily redeemable
Preferred Securities of subsidiary trust
holding solely junior subordinated debentures
of the Company(C).............................. 75.0 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............................. (1.7) 389.5
Unrealized appreciation of invested assets,
net.......................................... -- 22.7
------ -------
Total equity................................ (1.7) 466.7
------ -------
Total capitalization............................ $ 0.9 $ 645.7
------ -------
------ -------
</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 Debentures 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 subsidiary trust holding solely Junior
Subordinated Debentures of the Company.

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

30
<PAGE>

USE OF PROCEEDS

ALH currently estimates the proceeds to be received from this Preferred
Offering would be $72.4 million after giving effect to the underwriting discount
and estimated offering expenses. All of the proceeds from the sale of the
Preferred Securities will be invested by the Issuer in Junior Subordinated
Debentures of ALH. ALH intends that the proceeds from the sale of such Junior
Subordinated Debentures will be used to repay a portion of the revolving debt
under the Bank Credit Facility. The revolving line of credit matures in November
2001 and will bear interest at a variable rate, which rate was approximately
% as of the date of this Prospectus. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition--Liquidity and Capital
Resources."

ACCOUNTING TREATMENT

For financial reporting purposes, the Issuer will be treated as a subsidiary
of the Company and, accordingly, the accounts of the Issuer will be included in
the consolidated financial statements of the Company. The Preferred Securities
will be presented as a separate line item in the consolidated balance sheets of
the Company, entitled "Company - obligated mandatorily redeemable Preferred
Securities of subsidiary trust holding solely Junior Subordinated Debentures of
the Company" and the audited notes to the consolidated financial statements will
contain disclosure that (a) the Trust is wholly owned, (b) the sole asset of the
Trust is the % Junior Subordinated Debentures of ALH in the approximate
principal amount of $75 million having an initial stated Maturity of ,
2027, and (c) ALH fully and unconditionally guarantees the Trust's obligations
under the Preferred Securities. For financial reporting purposes, the Company
will record distributions payable on the Preferred Securities as an expense in
its consolidated statements of income.

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 the nine months
ended September 30, 1996 and 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 the nine
months ending September 30, 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 September 30, 1996 and December 31, 1995 and
1994, and for the nine months ended September 30, 1996 and 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, 1995 and for the nine months ended
September 30, 1995, and (iv) other financial data included elsewhere in this
Prospectus.

31
<PAGE>

<TABLE>
<CAPTION>
AS OF OR FOR THE
NINE MONTHS ENDED
SEPTEMBER 30,(A) AS OF OR FOR THE YEAR ENDED DECEMBER 31,(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....................... 78.8 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............ 328.0 396.9 532.9 526.3 515.8 476.9 456.3
Income before income taxes............. 101.6 83.9 110.5 26.1 55.8 57.3 69.3
Income tax expense..................... 38.7 29.9 41.2 19.4 21.4 18.6 24.5
--------- --------- --------- --------- --------- --------- ---------
Income before cumulative effect of a
change in accounting principles....... 62.9 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............................. $ 62.9 $ 54.0 $ 69.3 $ 6.7 $ 31.2 $ 38.7 $ 44.8
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Earnings per share (C)................. $ 2.86 -- $ 3.15 -- -- -- --

CONSOLIDATED BALANCE SHEET DATA:
Total invested assets.................. $ 2,810.2 $ 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...................... 3,779.4 3,760.5 3,832.0 3,618.6 3,524.8 3,286.4 3,195.6
Total shareholder's equity (B)(D)...... 512.4 488.3 539.9 418.3 505.9 421.2 376.9

OTHER OPERATING DATA:
Cash flows from operating activities... $ 85.3 $ 128.4 $ 202.0 $ 172.4 $ 173.6 $ 101.5 $ 155.7
Cash flows from investing activities... 5.8 (95.0) (148.3) (134.9) (192.1) (99.6) (175.2)
Cash flows from financing activities... (95.8) (56.5) (72.5) (24.8) 14.5 9.2 19.1

Individual life insurance in force, net
of $ 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 (E)........................ 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) The Capital Contribution would have the effect of reducing total
shareholder's equity as of September 30, 1996 and the year ended December
31, 1995 by $79 million.

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

32
<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 Common Stock Offerings at an estimated per share price of $15.50
(after deducting the underwriting discount and estimated offering expenses
payable by the Company and assuming no exercise of the underwriters'
over-allotment option), (iv) this Preferred Offering, and (v) the establishment
of the Bank Credit Facility, as if the establishment of the Closed Block, the
Capital Contribution, the Common Stock Offerings, this 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
Common Stock Offerings of $35 million and estimated net proceeds from this
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 Common Stock Offerings will be
used by the Company to retire debt under the Bank Credit Facility. The estimated
net proceeds from this 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 used 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"
and "The Common Stock Offerings."

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."

33
<PAGE>
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
----------------------------------------------------------------
COMMON STOCK PRO FORMA
OFFERINGS AND ASSUMING
REORGANIZATION PREFERRED PREFERRED
HISTORICAL (A) RELATED ADJUSTMENTS OFFERING (E) OFFERING (F)
------------- --------------------- ------------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS:
Invested assets
Fixed maturities................................. $ 2,297.6 $ 171.5 (B)(D $ 2,469.1
Equity securities................................ 74.6 (0.7)(B) 73.9
Short-term investments........................... 12.0 12.0
Mortgage loans................................... 260.2 (9.7)(B) 250.5
Real estate...................................... 40.0 (29.6)(B) 10.4
Policy loans..................................... 64.0 64.0
Other investments................................ 61.8 61.8
------------- ------- ------ -----------
Total investments................................ 2,810.2 131.5 0.0 2,941.7
Accrued investment income.......................... 42.1 42.1
Deferred policy acquisition costs.................. 123.5 123.5
Property and equipment, net........................ 13.3 (8.7)(B) 4.6
Deferred income taxes.............................. 4.4 4.4
Other assets....................................... 61.1 61.1
Closed Block....................................... 1,237.2 1,237.2
------------- ------- ------ -----------
Total assets................................... $ 4,291.8 $ 122.8 $ 0.0 $ 4,414.6
------------- ------- ------ -----------
------------- ------- ------ -----------
LIABILITIES:
Policyowner reserves and policyowner funds......... $ 2,113.2 $ 2,113.2
Other liabilities.................................. 119.8 35.5(B) (0.9) 154.4
Long-term debt..................................... 45.1 131.3 (B)(C)(D (72.4) 104.0
Closed Block liabilities........................... 1,501.3 1,501.3
------------- ------- ------ -----------
Total liabilities.............................. 3,779.4 166.8 (73.3) 3,872.9
Company-obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely
junior subordinated debentures of the Company..... -- 75.0 75.0
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; 14,500,000 shares issued and
outstanding historical; 17,000,000 shares pro
forma............................................. 14.5 2.5(C) 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
Additional paid in capital......................... 32.5(C) 32.5
Retained earnings.................................. 470.2 (79.0)(B) (1.7) 389.5
Unrealized appreciation of available for sale
securities........................................ 22.7 22.7
------------- ------- ------ -----------
Total shareholders' equity..................... 512.4 (44.0) (1.7) 466.7
------------- ------- ------ -----------
Total liabilities and shareholders' equity..... $ 4,291.8 $ 122.8 $ 0.0 $ 4,414.6
------------- ------- ------ -----------
------------- ------- ------ -----------
</TABLE>

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

34
<PAGE>
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1996
-------------------------------------------------------------------
COMMON STOCK PRO FORMA
OFFERINGS AND ASSUMING
REORGANIZATION RELATED PREFERRED PREFERRED
HISTORICAL (A) ADJUSTMENTS OFFERING (E) OFFERING (F)
------------- ------------------------- ------------ -----------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
REVENUES:
REVENUES:
Insurance premiums............................ $ 133.7 $ (95.8)(G) $ 37.9
Product charges............................... 39.1 (9.1)(G) 30.0
Net investment income......................... 189.3 (50.6)(G) 138.7
Realized gains on investments................. 62.5 1.4(G) 63.9
Other......................................... 2.3 1.5(H) 3.8
Contribution from the Closed Block............ 2.7 (2.6)(G) 0.1
------------- ------- ------------ -----------
Total revenues................................ 429.6 (155.2) 0.0 274.4
------------- ------- ------------ -----------
BENEFITS AND EXPENSES:
Total policyowner benefits.................... 222.9 (110.7)(G) 112.2
Total expenses................................ 78.8 (13.4)(G)(J)(L)(M) 4.2(K) 69.6
Dividends to policyowners..................... 26.3 (26.3)(G)
------------- ------- ------------ -----------
Total benefits and expenses................... 328.0 (150.4) 4.2 181.8
------------- ------- ------------ -----------
Income before income taxes...................... 101.6 (4.8) (4.2) 92.6
Income tax expense.............................. 38.7 (6.2)(I)(N) (1.5)(N) 31.0
------------- ------- ------------ -----------
Net income...................................... $ 62.9 $ 1.4 $ (2.7) $ 61.6
------------- ------- ------------ -----------
------------- ------- ------------ -----------
Net income per share............................ $ 2.86 $ 2.80
Shares used in the calculation of net income per
share.......................................... 22.0 22.0
</TABLE>

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

35
<PAGE>
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
---------------------------------------------------------------
COMMON STOCK PRO FORMA
OFFERINGS AND ASSUMING
REORGANIZATION PREFERRED PREFERRED
HISTORICAL (A) RELATED ADJUSTMENTS OFFERING (E) OFFERING (F)
------------- --------------------- ------------ -----------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
REVENUES:
Insurance premiums................................ $ 244.1 $ (182.2)(G) $ 61.9
Product charges................................... 57.3 (16.9)(G) 40.4
Net investment income............................. 285.2 (99.5)(B)(G) 185.7
Realized gains on investments..................... 51.4 (0.9)(G) 50.5
Other............................................. 5.4 2.0(H) 7.4
Contribution from the Closed Block................ 7.6(G) 7.6
------------- ------- ------------ -----------
Total revenues.................................... 643.4 (289.9) 0.0 353.5
------------- ------- ------------ -----------
BENEFITS AND EXPENSES:
Total policyowner benefits........................ 374.6 (200.3)(G) 174.3
Total expenses.................................... 108.9 (34.0)(G)(J)(L)(M) 4.8(K) 79.7
Dividends to policyowners......................... 49.4 (49.4)(G)
------------- ------- ------------ -----------
Total benefits and expenses....................... 532.9 (283.7) 4.8 254.0
------------- ------- ------------ -----------
Income before income taxes.......................... 110.5 (6.2) (4.8) 99.5
Income tax expense.................................. 41.2 (2.2)(N) (1.7)(N) 37.3
------------- ------- ------------ -----------
Net income.......................................... $ 69.3 $ (4.0) $ (3.1) $ 62.2
------------- ------- ------------ -----------
------------- ------- ------------ -----------
Net income per share................................ $ 3.15 $ 2.83
Shares used in the calculation of net income per
share.............................................. 22.0 22.0
</TABLE>

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

36
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(A) As a result of the Distribution which caused the Non-Life Insurance
Subsidiaries to be distributed to AmerUs Group, 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............................................................. 29.6
Property and equipment, net............................................. 8.7
Cash.................................................................... 35.5
Long-term debt assumed.................................................. (8.7)
-----
$ 79.0
-----
-----
</TABLE>

Net investment income has been increased by $0.1 million and $0.2 million
for the nine months ended September 30, 1996 and the year ended December 31,
1995, respectively, which represents the actual net investment loss 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, 1995.

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

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

(G) 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 which was established on June 30, 1996, 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, 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

37
<PAGE>
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."

(H) 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."

38
<PAGE>

(I) 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.

(J) 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 termination of a certain employment contract by
AmerUs Life.

(K) 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 this 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.

(L) 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.

(M) Represents the reduction in interest expense under the Bank Credit
Facility resulting from the application of the proceeds from the Common Stock
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.

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

39
<PAGE>
ORGANIZATIONAL STRUCTURE

The following chart illustrates the general organization of AMHC and its
subsidiaries, including the Company, after this Preferred Offering and the
Common Stock 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."

40
<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

ALH 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 ALH'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 certain 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 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
ALH. Under this structure, ALH 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 ALH. Immediately following the Distribution, ALH
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. ALH
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. ALH will use the proceeds of the Common Stock Offerings and this
Preferred Offering to repay such borrowings.

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.

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

41
<PAGE>
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.

42
<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. Different items are likely to occur in each period presented and
others may have different opinions as to which items may warrant adjustment. The
adjusted operating income shown below 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........................................ $ 62,944 $ 54,008 $ 69,348 $ 6,667 $ 31,209 $ 38,753 $ 44,847
Net realized (gains) losses on investments (A).... (40,006) (25,912) (32,244) 11,223 (10,187) (6,646) (8,547)
Equity add-on tax (B)............................. 4,480 9,585
Reorganization costs (C).......................... 726 115 1,426
Adoption of SFAS 106 (D).......................... 3,214
--------- --------- --------- --------- --------- --------- ---------
Adjusted operating income......................... $ 28,144 $ 28,211 $ 38,530 $ 27,475 $ 24,236 $ 32,107 $ 36,300
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Adjusted operating earnings per share............. $ 1.28 $ -- $ 1.75 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
</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. Realized gains may vary widely between periods. Such
amounts are determined by management's timing of individual transactions and
do not necessarily correspond to the underlying operating trends.

(B) Represents 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.

(C) 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. These costs were not of a continuing
nature and were not expected to have any effect on future operations.

(D) 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.

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."

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 shown as a net number under the caption "Contribution
from the Closed Block." This results in material reductions in the respective
line items in the income statement while having no effect on net income. Also,
all assets allocated to the Closed Block are grouped together and shown as a
separate item

43
<PAGE>

entitled "Closed Block Assets." Likewise, all liabilities attributable to the
Closed Block will be 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," the individual income statement components
for the first nine months of 1996 are not fully comparable with those for the
first nine months of 1995, prior to the establishment of the Closed Block.
Management believes that the presentation of 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 facilitates comparability with the results of operations for
the nine months ended September 30, 1995. Accordingly, the combined presentation
set forth below includes certain revenues and expenses associated with the
policies included in the Closed Block. Such presentation does not, however,
affect the Company's reported net income.

<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.......................... 46,892 1,038 47,930
Amortization of deferred policy acquisition costs......................... 31,865 11,244 43,109
Dividends to policyowners................................................. 26,343 14,331 40,674
----------- --------- -----------
328,029 77,641 405,670
Income before income taxes.................................................. 101,597 0 101,597
Income tax expenses......................................................... 38,653 0 38,653
----------- --------- -----------
Net income.................................................................. $ 62,944 $ 0 $ 62,944
----------- --------- -----------
----------- --------- -----------
</TABLE>

44
<PAGE>
RESULTS OF OPERATIONS

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

A summary of the Company's combined revenues, including revenues associated
with the Closed Block, 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, including Closed Block investments, 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

45
<PAGE>

$21.0 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 combined policyowner benefits, including policyowner
benefits associated with the Closed Block, 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

46
<PAGE>

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.

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 combined expenses, including expenses associated
with the Closed Block, 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......... 41,087 32,239
Amortization of deferred policy acquisition costs................................ 43,109 41,096
--------- ---------
Total expenses............................................................... $ 91,039 $ 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 $8.9 million, or 27.4%, to $41.1 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 $5.5 million, and higher premium taxes of $0.7 million due to a
one-time adjustment to the amortization of the guaranty association asset.
Settlements and legal fees included the establishment of a $5.0 million reserve
in connection with certain pending class action litigation. See "Business--Legal
Proceedings."

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. Since deferred policy
acquisition costs are generally amortized in proportion to gross margins, the
increase in amortization in the 1996 period is primarily due to higher gross
margins resulting partially from higher 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 $17.7 million in 1996, or 21.1%, to
$101.6 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.

47
<PAGE>

Income tax expense increased by $8.8 million in the nine months ended
September 30, 1996 to $38.7 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 38.1% compared to 35.6% for the first nine months of 1995.

Net income increased by $8.9 million in the nine months ended September 30,
1996 to $62.9 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.

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.

48
<PAGE>

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.

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

49
<PAGE>
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.

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 9.8%, 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 $84.5 million, or 323%, to $110.6
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.

50
<PAGE>

Net income increased by $62.6 million in 1995 to $69.3 million from $6.7
million in 1994. This increase resulted from the increases in pre-tax income
discussed above.

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.

51
<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.

52
<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 $24.5 million in 1994 to $6.7 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

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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." It is the Company's
intention to seek regulatory approval to pay dividends from AmerUs Life during
this 12-month period. However, at September 30, 1996, the Company also had the
ability to borrow up to approximately $120 million from AmerUs Life without
prior regulatory approval. The Company would utilize this borrowing capacity, if
necessary, to meet its liquidity needs including the payment of dividends to its
shareholders. Any such borrowings from AmerUs Life would be repaid from future
available dividends from AmerUs Life. Management believes that the Company's
access to capital through borrowings from AmerUs Life, public equity and debt
markets and the Bank Credit Facility provide the Company with sufficient
liquidity and capital resources during the 12-month period following the
Distribution, irrespective of whether regulatory approval for the payment of
dividends by AmerUs Life is obtained.

In December, 1996, ALH 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, ALH borrowed
$100 million under the term debt component of the facility and $75 million under
the revolving line of credit. ALH 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 Common
Stock Offerings and this Preferred Offering will be used to repay borrowings
outstanding under the Bank Credit Facility. Following such repayment, ALH would
have significant borrowing capacity under its revolving line of credit.

In connection with the Bank Credit Facility, ALH pledged approximately 49.9%
of the common stock of AmerUs Life owned by ALH and a $50 million 9% surplus
note payable to ALH by AmerUs Life. See "Certain Transactions and
Relationships--Security Arrangements For Bank Credit Facility."

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. In the future the Company anticipates that its liquidity and
capital needs will be met through interest and dividends from AmerUs Life,
accessing the public equity and debt markets depending upon market conditions,
or alternatively from bank financing.

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.

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<PAGE>
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 $85.3 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 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 aggregage 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--Future Policy Benefits Exposure"
and "--Interest Rate Fluctuations; Risk of Impact on Forced Liquidation of
Investment Portfolio."

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.

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<PAGE>

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,
including Closed Block investments. As of September 30, 1996, fixed maturity
securities were $3.1 billion, or 81.9%, of 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 $259
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 $433
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

56
<PAGE>
specific characteristics of each product line. The portfolio investment policies
and strategies establish asset duration, quality and other guidelines. The
Company utilizes analytical systems to establish an optimal asset mix for each
line of business. The Company seeks to manage the asset/liability mismatch and
the associated interest rate risk through active management of the investment
portfolio. Financial, actuarial, investment, product development and product
marketing professionals work together throughout the product development,
introduction and management phases to jointly develop and implement product
features, initial and renewal crediting strategies, and investment strategies
based on extensive modeling of a variety of factors under a number of interest
rate scenarios.

In force reserves and the assets allocated to each segment are modeled on a
regular basis to analyze projected cash flows under a variety of economic
scenarios. The result of this modeling is used to modify asset allocation,
investment portfolio duration and CONVEXITY and renewal crediting strategies.
The Company 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 this Preferred Offering and the Common Stock 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 this
Preferred Offering and the Common Stock 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 MATTER

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.

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<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
comparisons 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 $433
million (prior to the Common Stock 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.

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."

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<PAGE>
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. 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

59
<PAGE>
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 (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.

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<PAGE>
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.

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.

62
<PAGE>
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.

63
<PAGE>
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

64
<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

65
<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.

66
<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.

67
<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...................................... 4,469 6,742
Individual annuity (B)........................................ 41,505 152,190
-------- ----------
Subtotal.................................................... $ 56,428 $ 173,686
-------- ----------
-------- ----------
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...................................... 5,876 8,047
Individual annuity (B)........................................ 63,098 191,474
-------- ----------
Total (A)(B)................................................ $ 84,698 $ 223,095
-------- ----------
-------- ----------
</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

68
<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

69
<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. Management believes that the 1991-1993
mortality experience for Old AML would not materially change the statistics
reported for 1991-1993.

(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.

70
<PAGE>
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.

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.

71
<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 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% (6.6% after giving effect to
the Capital Contribution and application of proceeds from the Bank Credit
Facility) 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

72
<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).

73
<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............... 14.5 0.4
Short-term
investments.......... 22.4 0.6
----------- -----
Total invested
assets............... $ 3,639.8 100.0%
----------- -----
----------- -----
</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>

74
<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.

75
<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 --
---------- ----- ----------- ----- ---------- -----
Total below investment
grade........................ 155.5 5.6 40.8 10.9 196.3 6.2
---------- ----- ----------- ----- ---------- -----
Total......................... $ 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 and application of proceeds from the Bank Credit Facility). Of the
September 30, 1996 amount, commercial mortgage loans were 98.8%, and residential
mortgage loans were 1.2%.

76
<PAGE>

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 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 nine-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.

77
<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 4.5% ($8.9 million, or
3.6%, 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 ($4.6 million
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 $229.2 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 5.0% to 9.0%.

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 $74.6 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."

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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

ALH 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

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after 1980. The complaint alleges that sales presentations and policy
illustrations misrepresented that premiums would "vanish" after a stated number
of years, without adequate disclosure of the effect of changes in the policy
dividends. AmerUs Life has denied the allegations contained in such complaint
and denies any wrongdoing in connection with such allegations. The parties have
engaged in discovery but a hearing on certification of the class has not yet
been held.

The parties are engaged in a court-initiated mediation process in the Texas
litigation and, in light of the uncertainties, hazards and expenses of
litigation, have discussed a number of different settlement approaches,
including a nationwide class settlement of certain market conduct issues for a
substantial block of the Company's traditional whole life policies. Progress in
negotiating such a class settlement appears to have been made, but substantial
unresolved issues remain and no agreement has been reached. Even if such an
agreement were reached, the court would have to approve its terms. Should a
settlement satisfactory to the Company not be reached or not be approved, the
Company would continue to vigorously defend against the claims asserted,
including the existence of a legitimate class.

Due to the potential that a settlement may be reached in this case, the
Company has incurred a significant charge to income for the first nine months of
1996. Based upon its current estimates of the range of loss at between five and
eight million dollars, the Company has established a reserve of five million
dollars. The eventual costs of any settlement cannot be precisely determined at
this time, and may be more or less than the amount of the range.

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 breached the terms of certain life and annuity policies, and
breached certain other duties owed to policyowners, when it allegedly passed an
increase in its corporate income taxes (known as the deferred acquisition cost,
or DAC, tax) through to owners of those policies. The plaintiff, an insured
under a universal life policy issued by Central Life, seeks unspecified actual
and punitive 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.

Despite the Company's vigorous defense of these class action lawsuits and
its denial of any wrongdoing, there can be no assurance that the outcome of 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, as both properties were part of the Capital
Contribution. See "Certain Transactions and Relationships."

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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 issued rules which require prior approval by
the Iowa Commissioner of the issuance of stock by the Company. Pursuant to such
rules, the Company has filed an application with the Iowa Commissioner seeking
approval for the Common Stock Offerings, which approval has been obtained. Under
the rules, the Company will 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, lien, encumbrance or
hypothecation or alienation by AMHC, or any intermediate holding company, in or

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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

AHL 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 ALH 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 ALH 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
ALH 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 conjunction with
state regulators, has been reviewing existing insurance laws and regulations.
The NAIC

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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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The NAIC has recently adopted model legislation to govern insurance company
investments. In addition, draft alternative model legislation is also under
discussion at the NAIC level. However, implementation of any investment model
law into state law is not anticipated in the foreseeable future. Management
believes that if the recently adopted model law or the current alternative
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 ALH and AmerUs Life.

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

Set forth below with respect to each of the directors and executive officers
of ALH 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 and 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. From December 1992 to October 1996 Mr. Candlish was the
Chairman and Chief Executive Officer of First Alert, Inc., Aurora, Illinois.
Since December 1992 Mr. Candlish has been the Chairman and, from

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May 1996 to October 1996, Mr. Candlish served as the President of First Alert,
Inc. From 1989 to 1992, Mr. Candlish was the 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 1972 to 1983, Mr. Kalainov was a director of Old AML. From
1983 to December 1994, Mr. Kalainov was the 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. Daley 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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BOARD OF DIRECTORS OF ALH

The business of the Company is managed under the direction of ALH's Board of
Directors. The Board of Directors is presently composed of nine directors and
ALH intends to add two additional outside directors after completion of the
Common Stock 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 ALH's outside directors (including Mr. Wing)
will not be directors of AMHC or any of AMHC's subsidiaries. In addition, at
least two of ALH's outside directors, who have not yet been selected, will have
had no previous affiliation with the Company. ALH's independent directors will
review any intercompany transactions involving potential conflicts of interest
between ALH and AMHC and its subsidiaries. At present, all of the members of
ALH's Board of Directors are outside directors except Messrs. Brooks, Doan and
Kalainov.

ALH'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
Common Stock Offerings.

ALH'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 ALH's Board of Directors.

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 ALH or AmerUs Life.

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

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<PAGE>
MANAGEMENT COMPENSATION

EXECUTIVE OFFICER COMPENSATION

Since the formation of ALH, none of the executive officers has received any
compensation from ALH. 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 ALH and Chairman of AmerUs Life 1995 440,000 300,000 352,000
D T Doan
Vice Chairman of ALH and President of AmerUs
Life 1995 275,000 132,500 137,600
Thomas C. Godlasky
Executive Vice President and Chief Investment
Officer of ALH and AmerUs Life 1995 239,600 125,000 204,000(D)
Michael E. Sproule
Executive Vice President and Chief Financial
Officer of ALH 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 ALH.

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<PAGE>
COMPENSATION PURSUANT TO STOCK PLANS OF THE COMPANY

STOCK INCENTIVE PLAN

On September 15, 1996, ALH's Board of Directors (the "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 rules recently promulgated by
the Iowa Commissioner, no options or awards will be granted by ALH during the
six-month period following the closing of the Common Stock 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. ALH anticipates that the Stock Plan will be approved by ALH's sole
shareholder and become effective prior to the closing of the Common Stock
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 ALH).

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 ALH'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 ALH, or by
"cashless exercise").

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<PAGE>

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 ALH 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 an 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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<PAGE>
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 ALH at which directors are elected in 1999.

NON-EMPLOYEE DIRECTOR STOCK PLAN

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

The Director Plan provides for grants of restricted shares of ALH'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
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 ALH 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, ALH 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 ALH 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

90
<PAGE>
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 ALH'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

91
<PAGE>
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

93
<PAGE>

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.

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 AML 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 served 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 was to continue until May 15, 2000, but could expire earlier if Mr.
Brooks ceased to perform the duties of Chief Executive Officer ("CEO") of AmerUs
Life. If Mr. Kalainov's service as Chairman was terminated prior to May 15,
2000, AmerUs Life was required to execute a consulting contract with him
pursuant to which, among other things, AmerUs Life was 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 provided that Mr. Kalainov would
serve as Chairman of the Foundation until May 15, 2000.

Pursuant to the Employment Agreement, Mr. Kalainov received the annual
salary and incentive compensation described in the Summary Compensation Table.
Mr. Kalainov participated in AmerUs Life's employee benefit plan (the "Benefit
Plan") and was 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. In December 1996, prior to the
consummation of the Common Stock Offerings, Mr. Kalainov's employment agreement
was terminated by mutual agreement and Mr. Kalainov entered into an employment
agreement with AmerUs Group.

LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS

ALH's Articles of Incorporation provide that ALH shall indemnify its
directors to the fullest extent possible under the IBCA. ALH's Bylaws extend the
same indemnity to its officers. The Articles of Incorporation provide that no
director shall be liable to ALH 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 ALH 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. ALH 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, AND "AMERUS CONTROL
GROUP" MEANS, COLLECTIVELY, AMHC AND AMERUS GROUP. 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 ALH. ALH 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 ALH 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 ALH 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 ALH. See "Supervision and Regulation--Regulation
of the Company and AMHC." In compliance with this requirement, all of the issued
and outstanding shares of ALH's Class B Common Stock are owned by AmerUs Group,
a wholly-owned subsidiary of AMHC and ALH's immediate parent. Such ownership
will continue after the closing of this Offering. Additionally, ALH'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 ALH'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 ALH
(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 ALH and set forth in a written agreement
between the parties. However, neither AMHC nor ALH 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 desire to maintain the

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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 ALH have entered into an Amended and Restated
Intercompany Agreement dated as of December 1, 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 Control 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 Control 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 ALH or the creation
of any class or series of capital stock of ALH, (iv) any issuance by ALH or any
of its subsidiaries 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
ALH and (d) pursuant to the Transactions (defined as the Common Stock Offerings
and any corporate reorganization or transaction undertaken in connection with
the Common Stock 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 Control Group certain demand and
"piggyback" registration rights with respect to shares of Common Stock owned by
it. The AmerUs Control Group has the right to request up to two demand
registrations in each calendar year. The AmerUs Control 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 ALH initiated by ALH on its own behalf or on behalf of any
shareholder of ALH. Such registration rights are transferable by the AmerUs
Control Group provided that such transferee is (i) a member of the AmerUs
Control Group or (ii) in the case of Class A Common Stock only, 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 Control Group applicable to the shares of Common Stock sold
by the AmerUs Control 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 Control Group.

REIMBURSEMENT AGREEMENTS

The Company has agreed to pay all costs and expenses incurred in connection
with ALH'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 Control Group controls at least 50.1% of the combined
voting power of the outstanding Common Stock of ALH, the AmerUs Control Group
may purchase its pro rata share (based on its then current percentage equity
interest in ALH) of any voting equity security issued by ALH (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 the Trigger Date.

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, (ii) assistance 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 Affilliated Group. 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 Common Stock 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 Common Stock 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, 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 were assigned
to API at the time the Capital Contribution was made, as the properties to which
they relate were included in the properties which were 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 entered 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 were transferred to API as part of the Capital
Contribution. The lease agreements 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 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 contributions 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 Investments 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 made the Capital Contribution to or
for the benefit of its Non-Life Insurance Subsidiaries. The Capital Contribution
consisted of cash and other property having an approximate net carrying value of
$79 million. Following the Capital Contribution, AmerUs Life caused its Non-Life
Insurance Subsidiaries to be distributed to AmerUs Group pursuant to the
Distribution. 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 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
Financial Services, Inc. ("AFS"), and pursuant to the Distribution the Non-Life
Insurance Subsidiaries were distributed to AmerUs Group, thereby becoming sister
corporations to the Company.

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In 1995, AmerUs Life made 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 $4,463,000.

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 $64.0 million and $75.4 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 was 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 were 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.

SECURITY ARRANGEMENTS FOR BANK CREDIT FACILITY

In connection with the Bank Credit Facility, ALH has pledged to the lenders
approximately 49.9% of the common stock of AmerUs Life owned by ALH and a $50
million 9% surplus note payable to ALH by AmerUs Life. AmerUs Group has also
pledged shares of ALH's Class A Common Stock owned by AmerUs Group in an amount
which is limited by Iowa law and which, together with the voting shares owned by
shareholders other than AmerUs Group, shall be less than 50% of the total voting
shares of ALH. Under Iowa law, AMHC and AmerUs Group are prohibited from
pledging a majority of the shares necessary to elect the Board of Directors of
ALH, and ALH is prohibited from pledging a majority of the shares necessary to
elect the Board of Directors of AmerUs Life. AMHC and AmerUs Group have also
guaranteed the indebtedness of ALH under the Bank Credit Agreement.

DESCRIPTION OF THE PREFERRED SECURITIES

The Trust Agreement among ALH as Depositor, and Wilmington Trust Company as
Property Trustee, and the three Administrative Trustees named therein,
authorizes and creates the Issuer. The Trust Agreement will be qualified under
the Trust Indenture Act. The Property Trustee, Wilmington Trust Company, will
act as the indenture trustee for purposes of compliance with the provisions of
the Trust Indenture Act. The Preferred Securities and the Common Securities
(together, "Trust Securities") will be issued by the Administrative Trustees on
behalf of the Issuer pursuant to the terms of the Trust Agreement. The Preferred
Securities represent undivided beneficial interests in the Issuer and entitle
the holders thereof to a preference in certain circumstances with respect to
distributions and amounts payable on redemption or liquidation over the Common
Securities, as well as other benefits as described in the Trust Agreement. The
following summaries of certain provisions of the Trust Agreement do not purport
to be complete and are subject to, and are qualified in their entirety by
reference to, all the provisions of the Trust Agreement, which is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part, and
the Trust Indenture Act. Wherever particular sections of the Trust Agreement are
referred to, such sections are incorporated herein by reference. Section
references used herein are references to provisions of the Trust Agreement,
unless otherwise noted.

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GENERAL

The Issuer is a Delaware statutory business trust. ALH, the Depositor, will
own, directly or indirectly, all of the outstanding Common Securities of the
Trust. The Common Securities rank pari passu, and payments will be made thereon
pro rata, with the Preferred Securities except as described under
"--Subordination of Common Securities." (Section 4.03.) The Junior Subordinated
Debentures will be owned by the Property Trustee and held in trust for the
benefit of the Trust and the holders of the Trust Securities. (Section 2.09.)
Pursuant to the Guarantee, ALH fully and unconditionally guarantees the payment
of distributions (as defined below) and amounts payable on redemption of the
Preferred Securities or liquidation of the Issuer, but does not guarantee such
payments when the Issuer does not have funds available to pay such amounts.

THE TRUSTEES

Pursuant to the Trust Agreement, the number of the Issuer's trustees (the
"Trustees") initially will be four. (Section 8.17.) In addition to the Property
Trustee, the Issuer will have three Administrative Trustees who will be officers
or employees of, or otherwise affiliated with ALH. The Administrative Trustees
are authorized and directed to conduct the affairs of the Issuer and to operate
the Issuer such that the Issuer will not be deemed to be an "investment company"
required to be registered under the Investment Company Act or fail or cease to
qualify as a grantor trust for United States federal income tax purposes and so
that the Junior Subordinated Debentures will be treated as indebtedness of ALH
for United States federal income tax purposes. In this connection, ALH and the
Administrative Trustees are authorized to take any action, not inconsistent with
applicable law, the certificate of trust of the Issuer or the Trust Agreement,
that each of ALH and the Administrative Trustees determines in its discretion to
be necessary or desirable for such purposes, as long as such action does not
adversely affect the interests of the Holders of the Preferred Securities.
(Section 2.07(d).)

Subject to the specific authority and duties of the Property Trustee, the
Trust Agreement provides the Administrative Trustees with exclusive and complete
authority to operate and carry out the purposes of the Issuer. As among the
Trustees, the Administrative Trustees have the power, duty and authority to act
on behalf of the Issuer with respect to (A) the issuance and sale of the Trust
Securities, (B) to cause the Issuer to enter into, and to execute, deliver and
perform on behalf of the Issuer, certain agreements necessary or desirable in
connection with the purposes and function of the Trust, (C) assisting in the
registration of the Preferred Securities under the Securities Act and under
state securities or blue sky laws, and the qualification of the Trust Agreement
under the Trust Indenture Act, (D) assisting in the quotation or listing of the
Preferred Securities upon the Nasdaq National Market or such securities exchange
or exchanges as determined by ALH and the registration of the Preferred
Securities under the Securities Exchange Act, and the preparation and filing of
all periodic and other reports and other documents pursuant to the foregoing,
(E) the sending of notices (other than notices of default) and other information
regarding the Trust Securities and the Junior Subordinated Debentures to the
holders of Trust Securities, (F) the appointment of certain agents in accordance
with the Trust Agreement, and certain other functions relating to the
registration of stock transfers, the winding up and liquidation of the Issuer,
the execution of documents and actions incidental to the foregoing. As set forth
in greater detail below, the Property Trustee has the power, duty and authority
to act on behalf of the Issuer with respect to (A) establishment of a payment
account, (B) the receipt of the Junior Subordinated Debentures, (C) the
collection and distribution of amounts due under the Junior Subordinated
Debentures, (D) the exercise of all of the rights, powers and privileges of a
holder of the Junior Subordinated Debentures, (E) the sending of notices of
default and other information regarding the Trust Securities and the Junior
Subordinated Debentures to the holders of the Trust Securities, (F) the
distribution of the Trust Property in accordance with the Trust Agreement, and
certain other functions relating to the winding up and liquidation of the Issuer
and the protection and conservation of the Trust Property after an Event of
Default (as defined below). (Section 2.07(a).)

The Property Trustee, other than during the occurrence and continuance of an
Event of Default, undertakes to perform only such duties as are specifically set
forth in the Trust Agreement and, after such Event of Default, must exercise the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the Property
Trustee is

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under no obligation to exercise any of the powers vested in it by the applicable
Trust Agreement at the request of any holder of Preferred Securities unless it
is offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby. (Section 8.01(a) and (c).) If no Event of Default has
occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the Trust
Agreement or is unsure of the application of any provision of the Trust
Agreement, and the matter is not one on which holders of Preferred Securities
are entitled under the Trust Agreement to vote, then the Property Trustee shall
take such action as is directed by ALH and if not so directed, shall take such
action as it deems advisable and in the best interests of the holders of the
Trust Securities and will have no liability except for its own bad faith,
negligence or willful misconduct. (Section 8.03.)

DISTRIBUTIONS

The Preferred Securities represent undivided beneficial interests in the
assets of the Issuer, and the distributions on each Preferred Security will be
payable at a rate per annum of % of the stated amount of $25 per Preferred
Security (the "Liquidation Amount"). If the interest payment period for the
Junior Subordinated Debentures is extended pursuant to the Indenture (as defined
below), then the rate per annum at which distributions on the Preferred
Securities accumulate shall be increased by an amount such that the aggregate
amount of distributions that accumulate on all Preferred Securities during any
such Extension Period is equal to the aggregate amount of interest (including
interest payable on unpaid interest at the percentage rate per annum set forth
above, compounded quarterly) that accrues during any such extended interest
payment period on the Junior Subordinated Debentures. The term "distributions"
as used herein includes any such interest payable unless otherwise stated. The
amount of distributions payable for any period will be computed on the basis of
a 360-day year of twelve 30-day months. (Section 4.01(b).) See "Description of
the Junior Subordinated Debentures--Interest" and "--Option to Extend Interest
Payment Period."

Distributions on the Preferred Securities will be cumulative, will accrue
from , 1997 and will be payable quarterly in arrears, on the last
day of March, June, September and December of each year, commencing March 31,
1997, except as otherwise described below. In the event that any date on which
distributions are otherwise payable on the Preferred Securities is not a
Business Day, payment of the distribution payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day is
in the next succeeding calendar year, payment of such distribution shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date (each date on which distributions are otherwise
payable in accordance with the foregoing, a "Distribution Date"). "Business Day"
means any day other than a Saturday or Sunday, or a day on which banking
institutions in The City of New York are authorized or required by law or
executive order to remain closed or a day on which the principal office of the
Property Trustee or Debenture Trustee (as defined herein) is closed for
business. (Section 4.01(a).)

ALH has the right under the Indenture pursuant to which it will issue the
Junior Subordinated Debentures, so long as no Event of Default under the
Indenture (also referred to herein as a "Debenture Event of Default" and defined
below, see "Description of the Junior Subordinated Debentures--Debenture Events
of Default") has occurred and is continuing, to defer the payment of interest
from time to time on the Junior Subordinated Debentures for a period not
exceeding 20 consecutive quarters with respect to each deferred period (each, an
"Extension Period"), provided that no Extension Period may extend beyond the
Stated Maturity of the Junior Subordinated Debentures. "Stated Maturity" means
the date specified in the Junior Subordinated Debentures as the date on which
the principal, together with all accrued and unpaid interest is due and payable,
whether the initial such date, or such later date chosen by ALH if the Stated
Maturity is extended pursuant to the Indenture. The Junior Subordinated
Debentures will initially mature on , 2027. As a consequence of any
such election, quarterly distributions on the Preferred Securities will be
deferred (but would continue to accrue with interest thereon, including interest
payable on unpaid interest at the rate per annum set forth above, compounded
quarterly) by the Issuer during any such Extension Period. In the event that ALH
exercises this right, during such Extension Period ALH may not, and shall cause
any subsidiary of ALH not to,

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(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of ALH's capital
stock or (ii) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of ALH that rank pari passu with
or junior in interest to the Junior Subordinated Debentures or make any
guarantee payments with respect to any guarantee by ALH of the debt securities
of any subsidiary of ALH that by their terms rank PARI PASSU or junior in
interest to the Junior Subordinated Debentures (other than (a) dividends or
distributions in Common Stock of ALH, (b) payments under the Guarantee, and (c)
purchases of Common Stock related to the issuance of Common Stock under any of
ALH's benefit plans for its directors, officers or employees). Prior to the
termination of any such Extension Period, ALH may further extend the interest
payment period, provided that no Extension Period together with all such
previous and further extensions thereof may exceed 20 consecutive quarters or
extend beyond the Stated Maturity of the Junior Subordinated Debentures. Upon
the termination of any Extension Period and the payment of all amounts then due,
ALH may elect to begin a new Extension Period, subject to the above
requirements. There is no limitation on the number of times that ALH may elect
to begin an Extension Period. See "Description of the Junior Subordinated
Debentures--Interest" and "Description of the Junior Subordinated
Debentures--Option to Extend Interest Payment Period."

It is anticipated that the income of the Issuer available for distribution
to the holders of the Preferred Securities will be limited to payments under the
Junior Subordinated Debentures in which the Issuer will invest the proceeds from
the issuance and sale of the Preferred Securities and the Common Securities. See
"Description of the Junior Subordinated Debentures." If ALH does not make
interest payments on the Junior Subordinated Debentures, the Property Trustee
will not have funds available to pay distributions on the Preferred Securities.
The payment of distributions (if and to the extent the Issuer has funds
available therefor at such time) is guaranteed by ALH as set forth herein under
"Description of the Guarantee."

Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of the Issuer on the relevant record
dates, which, as long as the Preferred Securities remain in book-entry-only
form, will be one Business Day prior to the relevant Distribution Date. Subject
to any applicable laws and regulations and the provisions of the Trust
Agreement, each such payment will be made as described under "--Book-Entry-Only
Issuance--The Depository Trust Company" below. In the event the Preferred
Securities do not remain in book-entry-only form, the relevant record date shall
be the date fifteen (15) days prior to the relevant Distribution Date. (Section
4.01(d).)

REDEMPTION

MANDATORY REDEMPTION. Upon the repayment or redemption, in whole or in
part, of the Junior Subordinated Debentures, whether at Stated Maturity or upon
earlier redemption as provided in the Indenture (each, a "Redemption Date"), the
proceeds from such repayment or redemption shall be applied by the Trustee to
redeem a Like Amount of Preferred Securities, upon not less than 30 nor more
than 60 days' notice, at a redemption price equal to the aggregate Liquidation
Amount of such Preferred Securities plus accumulated but unpaid distributions
thereon to the date of redemption plus the amount of premium, if any, paid by
ALH upon the concurrent redemption of a Like Amount of Junior Subordinated
Debentures (the "Redemption Price"). See "Description of the Junior Subordinated
Debentures-- Optional Redemption." "Like Amount" means (i) with respect to a
redemption of Trust Securities, Trust Securities having a Liquidation Amount
equal to the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture and the proceeds of
which will be used to pay the Redemption Price of such Trust Securities, and
(ii) with respect to a distribution of Junior Subordinated Debentures to holders
of Trust Securities in connection with a dissolution or liquidation of the
Issuer, Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities of the holder to whom such Junior
Subordinated Debentures are distributed.

ALH has the right to redeem the Junior Subordinated Debentures (a) at any
time on or after , 2002, in whole or in part, subject to the
conditions described under "Description of Junior Subordinated
Debentures--Optional Redemption", or (b) at any time, in whole but not in part,
on

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the occurrence of a Tax Event or an Investment Company Event (each, as defined
below, a "Special Event") and subject to the further conditions described under
"Description of the Junior Subordinated Debentures--Optional Redemption."

SPECIAL EVENT REDEMPTION OR DISTRIBUTION OF JUNIOR SUBORDINATED
DEBENTURES. If a Special Event shall occur and be continuing, ALH has the right
within 90 days following the occurrence of such Special Event to redeem the
Junior Subordinated Debentures in whole (but not in part) and thereby cause a
mandatory redemption of the Preferred Securities and Common Securities in whole
(but not in part) at the Redemption Price. If a Special Event were to occur,
there can be no assurance that ALH would have sufficient funds to effectuate an
optional redemption of the Junior Subordinated Debentures and pay the Redemption
Price. ALH's ability to exercise its option to redeem the Junior Subordinated
Debentures may be limited by the terms of its then existing borrowing and other
agreements. At any time, ALH has the right to terminate the Issuer and, after
satisfaction of the liabilities of creditors of the Issuer as provided by
applicable law, cause a Like Amount (defined above) of the Junior Subordinated
Debentures to be distributed to the holders of the Preferred Securities and
Common Securities in liquidation of the issuer (after which such Preferred
Securities and Common Securities will no longer be deemed to be outstanding). If
ALH does not elect either option described above, the Preferred Securities will
remain outstanding and, in the event a Tax Event has occurred and is continuing,
Additional Sums (as defined below) may be payable on the Junior Subordinated
Debentures. "Additional Sums" means the additional amounts as may be necessary
in order that the amount of distributions then due and payable by the Issuer on
the outstanding Preferred Securities and Common Securities shall not be reduced
as a result of any additional taxes, duties and other governmental charges to
which the Issuer has become subject as a result of a Tax Event.

If ALH elects to terminate the Issuer and thereby causes the Junior
Subordinated Debentures to be distributed to holders of the Preferred Securities
in liquidation of the Issuer, ALH shall have the right to shorten or extend the
Stated Maturity of such Junior Subordinated Debentures, provided that it can
extend the Stated Maturity only if certain conditions are met. See "Description
of The Junior Subordinated Debentures--General".

"Investment Company Event" means the receipt by the Issuer of an opinion of
counsel experienced in such matters to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), the Issuer is or
will be considered an "investment company" that is required to be registered
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"), which Change in 1940 Act Law becomes effective on or after the date of
original issuance of the Preferred Securities issued by the Issuer. ALH has the
right, within 90 days following the occurrence of an Investment Company Event,
to redeem the Junior Subordinated Debentures in whole (but not in part).

"Tax Event" means the receipt by the Issuer of an opinion of counsel
experienced in such matters to the effect that, as a result of (a) any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein affecting taxation, or (b) any amendment to,
or change in, an interpretation or application of such laws or regulations by
any legislative body, court, governmental agency or regulatory authority
(including the enactment of any legislation and the publication of any judicial
decision or regulatory determination on or after the date of issuance of the
Preferred Securities), there is more than an insubstantial risk that (i) the
Issuer is, or will be within 90 days of the date of such opinion, subject to
United States federal income tax with respect to interest income received or
accrued on the Junior Subordinated Debentures, (ii) interest payable by ALH on
the Junior Subordinated Debentures is not, or within 90 days of the date of such
opinion, will not be, deductible by ALH, in whole or in part, for United States
federal income tax purposes, or (iii) the Issuer is, or will be within 90 days
of the date of such opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges. ALH has the right, within 90 days
following the occurrence of a Tax Event, to redeem the Junior Subordinated
Debentures in whole (but not in part).

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With certain limited exceptions, after the liquidation date fixed for any
distribution of Junior Subordinated Debentures for Preferred Securities (the
"Liquidation Date") (i) the Preferred Securities will no longer be deemed to be
outstanding, (ii) The Depository Trust Company ("DTC") or its nominee, as the
record holder of the Preferred Securities, will receive a registered global
certificate or certificates representing the Junior Subordinated Debentures to
be delivered upon such distribution, (iii) any certificates representing
Preferred Securities not held by DTC or its nominee will be deemed to represent
a Like Amount of Junior Subordinated Debentures, accruing interest at the rate
provided for in the Junior Subordinated Debentures from the last Distribution
Date on which a distribution was made on such Preferred Securities until such
certificates are surrendered, (iv) all rights of the holders of Preferred
Securities will cease, except the right of such holders to receive Junior
Subordinated Debentures upon surrender of the certificates representing
Preferred Securities and (v) ALH shall use its reasonable efforts to have the
Junior Subordinated Debentures listed on the New York Stock Exchange or on such
other exchange, interdealer quotation system or self-regulatory organization as
the Preferred Securities are then listed. (Section 9.04(c).)

There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a termination and liquidation of the Issuer
were to occur. Accordingly, the Preferred Securities that an investor may
purchase, or the Junior Subordinated Debentures that the investor may receive on
termination and liquidation of the Issuer, may trade at a discount to the price
that the investor paid to purchase the Preferred Securities offered hereby.

REDEMPTION PROCEDURES

Preferred Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price stated above with the proceeds from the contemporaneous
redemption of Junior Subordinated Debentures. Redemptions of the Preferred
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Issuer has funds available for the
payment of such Redemption Price. (Section 4.02(c).) See also "--Subordination
of Common Securities."

If the Property Trustee gives a notice of redemption in respect of Preferred
Securities, then, by 12:00 noon, New York time, on the Redemption Date, subject
to the immediately preceding paragraph, the Property Trustee will, so long as
the Preferred Securities are in book-entry-only form, irrevocably deposit with
DTC funds sufficient to pay the applicable Redemption Price and will give DTC
irrevocable instructions and authority to pay the Redemption Price to the
holders of the Preferred Securities. See "--Book-Entry-Only Issuance--The
Depository Trust Company." If the Preferred Securities are no longer in book-
entry-only form, the Property Trustee, subject to the immediately preceding
paragraph, will irrevocably deposit with the paying agent for the Preferred
Securities funds sufficient to pay the applicable Redemption Price and will give
such paying agent irrevocable instructions and authority to pay the Redemption
Price to the holders thereof upon surrender of their certificates representing
Preferred Securities. Notwithstanding the foregoing, distributions payable on or
prior to the Redemption Date for any Preferred Securities called for redemption
shall be payable to the holders of such Preferred Securities as they appear on
the register for the Preferred Securities on the relevant record dates for the
related Distribution Dates. If notice of redemption shall have been given and
funds deposited as required, then upon the Redemption Date, all rights of
holders of such Preferred Securities so called for redemption will cease, except
the right of the holders of such Preferred Securities to receive the Redemption
Price, but without interest on such Redemption Price, and such Preferred
Securities will cease to be outstanding. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day falls in the next calendar
year, such payment shall be made on the immediately preceding Business Day in
each case, with the same force and effect as if made on such date. In the event
that payment of the Redemption Price in respect of any Preferred Securities
called for redemption is improperly withheld or refused and not paid either by
the Issuer or by ALH pursuant to the Guarantee described under "Description of
the Guarantee," distributions on such Preferred Securities will continue

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to accrue, at the then applicable rate, from the original Redemption Date to the
date of payment, in which case the actual payment date will be the date fixed
for redemption for purposes of calculating the Redemption Price. (Section
4.02(d).)

Payment of the Redemption Price on the Preferred Securities and distribution
of Junior Subordinated Debentures to holders of Preferred Securities shall be
made to the recordholders thereof as they appear on the register for the
Preferred Securities on the relevant record date, which shall be one Business
Day prior to the relevant Redemption Date or Liquidation Date, as applicable;
provided, however, that in the event that the Preferred Securities do not remain
in book-entry-only form, the relevant record date shall be the date fifteen (15)
days prior to the Redemption Date or Liquidation Date, as applicable. (Section
4.02(e).)

If less than all the outstanding Trust Securities are to be redeemed on a
Redemption Date, then the aggregate Liquidation Amount of Trust Securities to be
redeemed shall be allocated pro rata among the Common Securities and the
Preferred Securities according to their relative aggregate Liquidation Amounts.
The particular Preferred Securities to be redeemed shall be selected on a pro
rata basis (based upon Liquidation Amounts) not more than 60 days prior to the
Redemption Date by the Property Trustee from the outstanding Preferred
Securities not previously called for redemption, by such method (including,
without limitation, by lot) as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $25 or an integral multiple of $25 in excess thereof) of the
Liquidation Amount of Preferred Securities of a denomination larger than $25.
See "--Book-Entry Only Issuance--The Depository Trust Company." The Property
Trustee shall promptly notify the Security Registrar in writing of the Preferred
Securities selected for redemption and, in the case of any Preferred Securities
selected for partial redemption, the Liquidation Amount thereof to be redeemed.
For all purposes of the Trust Agreement, unless the context otherwise requires,
all provisions relating to the redemption of Preferred Securities shall relate,
in the case of any Preferred Securities redeemed or to be redeemed only in part,
to the portion of the Liquidation Amount of Preferred Securities which has been
or is to be redeemed. Wilmington Trust Company is the initial Security Registrar
(Sections 4.02(f) and 5.04.)

Subject to applicable law (including, without limitation, United States
federal securities law), ALH or its subsidiaries may at any time and from time
to time purchase outstanding Preferred Securities by tender, in the open market
or by private agreement.

SUBORDINATION OF COMMON SECURITIES

Payment of distributions on, and the Redemption Price of, the Preferred
Securities, as applicable, shall be made, subject to the second preceding
paragraph, pro rata based on the Liquidation Amount of the Trust Securities;
provided, however, that if on any Distribution Date or Redemption Date any Event
of Default (as defined below, see "--Events of Default; Notice") under the Trust
Agreement resulting from a Debenture Event of Default (as defined below) shall
have occurred and be continuing, no payment of any distribution on, or
Redemption Price of, any Common Security, and no other payment on account of the
redemption, liquidation or other acquisition of Common Securities, shall be made
unless payment in full in cash of all accumulated and unpaid distributions on
all outstanding Preferred Securities for all distribution periods terminating on
or prior thereto, or in the case of payment of the Redemption Price the full
amount of such Redemption Price on all outstanding Preferred Securities, shall
have been made or provided for, and all funds available to the Property Trustee
shall first be applied to the payment in full in cash of all distributions on,
or the Redemption Price of, Preferred Securities then due and payable.
Similarly, the Preferred Securities have a priority over the Common Securities
with respect to Liquidation Distributions (as defined below) when an Event of
Default under the Trust Agreement resulting from a Debenture Event of Default
has occurred and is continuing. See "--Liquidation Distribution Upon
Termination." (Section 4.03(a).)

In the case of the occurrence of any Event of Default under the Trust
Agreement resulting from a Debenture Event of Default, the holder of Common
Securities will be deemed to have waived any right to act with respect to any
such Event of Default under the Trust Agreement with respect to the Common
Securities until the effect of all such Events of Default with respect to the
Preferred Securities have been

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so cured, waived or otherwise eliminated. Until any such Events of Default under
the Trust Agreement with respect to the Preferred Securities have been cured,
waived or otherwise eliminated, the Property Trustee shall act solely on behalf
of the holders of the Preferred Securities and not the holder of the Common
Securities, and only the holders of the Preferred Securities will have the right
to direct the Property Trustee to act on their behalf. (Section 4.03(b).)

LIQUIDATION DISTRIBUTION UPON TERMINATION

Pursuant to the Trust Agreement, the Issuer shall be terminated by the
Trustees on the first to occur of: (i) the expiration of the term of the Issuer;
(ii) the occurrence of certain events of bankruptcy or insolvency in respect of,
or the dissolution or liquidation of, ALH; (iii) the distribution of the Junior
Subordinated Debentures to the holders of Preferred Securities and Common
Securities if ALH, as Depositor, has given written direction to the Property
Trustee to terminate the Issuer (which direction is optional and wholly within
the discretion of ALH, as Depositor); (iv) the redemption of all of the Trust
Securities; and (v) the entry of an order for dissolution of the Issuer by a
court of competent jurisdiction. (Sections 9.01 and 9.02.)

If a termination event specified in clause (ii), (iii) or (v) above occurs
(or immediately prior to December 31, 2052, which is the expiration date
specified in the Trust Agreement), the Issuer shall be liquidated by the
Trustees as expeditiously as the Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to each holder of Preferred Securities and Common
Securities a Like Amount of Junior Subordinated Debentures, unless such
distribution is determined by the Property Trustee not to be practical, in which
event such holders will be entitled to receive out of the assets of the Issuer
available for distribution to holders after satisfaction of liabilities to
creditors, an amount equal to the Liquidation Amount per Trust Security plus
accrued and unpaid distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"). If such Liquidation Distribution can be
paid only in part because the Issuer has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then, subject to the next
succeeding sentence, the amounts payable by the Issuer on the Trust Securities
shall be paid on a pro rata basis (based on Liquidation Amounts). The holder of
the Common Securities will be entitled to receive Liquidation Distributions pro
rata with the holders of the Preferred Securities, except that if an Event of
Default has occurred and is continuing under the Trust Agreement, the Preferred
Securities shall have a priority over the Common Securities. (Sections 9.04(a)
and 9.04(d).)

EVENTS OF DEFAULT; NOTICE

Any one of the following events constitutes an "Event of Default" under the
Trust Agreement with respect to the Preferred Securities issued thereunder
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

(i) the occurrence of a Debenture Event of Default (as defined in
"Description of Junior Subordinated Debentures--Debenture Events of
Default"); or

(ii) default by the Property Trustee in the payment of any distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or

(iii) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or

(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Trustees in the Trust Agreement (other than
a covenant or warranty a default in the performance of which or the breach
of which is dealt with in clause (ii) or (iii) above), and continuation of
such default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the defaulting Trustee or Trustees by
the holders of at least 25% in aggregate Liquidation Amount of the
outstanding Preferred Securities a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" under the Trust Agreement; or

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(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by ALH to appoint a
successor Property Trustee within 60 days thereof. (Section 101.)

Within five Business Days after the occurrence of any Event of Default, the
Property Trustee shall transmit notice of any Event of Default actually known to
the Property Trustee to the holders of Trust Securities, the Administrative
Trustees and ALH, as Depositor, unless such default shall have been cured or
waived. (Section 8.02.) Each of ALH, as Depositor, and the Administrative
Trustees on behalf of the Trust is required to provide annually to the Property
Trustee a certificate as to whether or not they are in compliance with all of
the conditions and covenants applicable to them under the Trust Agreement.
(Section 8.15.)

If an Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities upon dissolution of
the Issuer as described above. See "--Liquidation Distribution Upon
Dissolution." The existence of an Event of Default does not entitle the holders
of Preferred Securities to accelerate the maturity thereof.

REMOVAL OF TRUSTEES

Unless a Debenture Event of Default shall have occurred and be continuing,
any Trustee may be removed at any time by the holder of the Common Securities.
If a Debenture Event of Default has occurred and is continuing, the Property
Trustee may be removed at such time by the holders of a majority in Liquidation
Amount of the outstanding Preferred Securities. In no event will the holders of
the Preferred Securities have the right to vote to appoint, remove or replace
the Administrative Trustees, which voting rights are vested exclusively in ALH
as the holder of the Common Securities. No resignation or removal of any Trustee
and no appointment of a successor Trustee shall be effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable provisions of the Trust Agreement. (Section 8.10.)

MERGER OR CONSOLIDATION OF TRUSTEES

Any corporation into which the Property Trustee or any Administrative
Trustee that is not a natural person may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which any such Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of any
such Trustee, shall be the successor of such Trustee under the Trust Agreement,
provided such corporation shall be otherwise qualified and eligible. (Section
8.12.)

MERGER, CONSOLIDATION, AMALGAMATION OR REPLACEMENT OF THE ISSUER

The Issuer may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other entity, except as
described below. The Issuer may, at the request of ALH, with the consent of the
Administrative Trustees and without the consent of the holders of the Preferred
Securities or the Property Trustee, merge with or into, consolidate, amalgamate,
or be replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to a trust organized as such under the laws of any
state; provided, that (i) such successor entity either (a) expressly assumes all
of the obligations of the Issuer with respect to the Preferred Securities or (b)
substitutes for the Preferred Securities other securities having substantially
the same terms as the Preferred Securities (the "Successor Securities") so long
as the Successor Securities rank the same as the Preferred Securities rank in
priority with respect to distributions and payments upon liquidation, redemption
and otherwise, (ii) ALH expressly appoints a trustee of such successor entity
possessing the same powers and duties as the Property Trustee as the holder of
the Junior Subordinated Debentures, (iii) the Successor Securities are listed or
quoted, or any Successor Securities will be listed or quoted upon notification
of issuance, on any national securities exchange, the Nasdaq National Market or
other organization on which the Preferred Securities are then listed or quoted,
if any, (iv) such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not cause the Preferred Securities (including any
Successor Securities) to be downgraded

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by any nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Preferred Securities (including any Successor Securities) in any material
respect, (vi) such successor entity has a purpose identical to that of the
Issuer, (vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, ALH has received an opinion from independent
counsel to the Issuer experienced in such matters to the effect that (a) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not adversely affect the rights, preferences and privileges of the holders
of the Preferred Securities (including any Successor Securities) in any material
respect, and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Issuer nor such
successor entity will be required to register as an investment company under the
Investment Company Act and (viii) ALH or any permitted successor or assignee
owns all of the Common Securities of such successor entity and guarantees the
obligations of such successor entity under the Successor Securities at least to
the extent provided by the Guarantee. Notwithstanding the foregoing, the Issuer
shall not, except with the consent of holders of 100% in Liquidation Amount of
the Preferred Securities, consolidate, amalgamate, merge with or into or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Issuer or the successor entity to be classified as other than a grantor trust
for United States federal income tax purposes. (Section 9.05.)

VOTING RIGHTS

Except as provided below and under "Description of the Guarantee--Amendments
and Assignment" and "Description of the Junior Subordinated
Debentures--Modification of the Indenture" and as otherwise required by law and
the Trust Agreement, the holders of the Preferred Securities will have no voting
rights. (Section 6.01(a).)

The Trust Agreement may be amended from time to time by ALH, the Property
Trustee and the Administrative Trustees, without the consent of the holders of
the Preferred Securities (i) to cure any ambiguity, correct or supplement any
provision in the Trust Agreement that may be inconsistent with any other
provision, or to make any other provisions with respect to matters or questions
arising under the Trust Agreement, which shall not be inconsistent with the
other provisions of the Trust Agreement, or (ii) to modify, eliminate or add to
any provisions of the Trust Agreement to such extent as shall be necessary to
ensure that the Issuer will be classified for United States federal income tax
purposes as a grantor trust at all times that any Trust Securities are
outstanding or to ensure that the Issuer will not be required to register as an
"investment company" under the Investment Company Act; provided, however, that
in the case of clause (i), such action shall not adversely affect in any
material respect the interests of any holder of Trust Securities, and any
amendments of such Trust Agreement shall become effective when notice thereof is
given to the holders of Trust Securities. The Trust Agreement may be amended by
ALH, the Property Trustee and the Administrative Trustees with (i) the consent
of holders representing not less than a majority (based upon Liquidation
Amounts) of the outstanding Trust Securities, and (ii) receipt by the Trustees
of an opinion of counsel to the effect that such amendment or the exercise of
any power granted to the Trustees in accordance with such amendment will not
affect the Issuer's status as a grantor trust for United States federal income
tax purposes or the Issuer's exemption from status as an "investment company"
under the Investment Company Act, provided that without the consent of each
affected holder of Trust Securities, such Trust Agreement may not be amended to
(i) change the amount or timing of any distribution on the Trust Securities or
otherwise adversely affect the amount of any distribution required to be made in
respect of the Trust Securities as of a specified date or (ii) restrict the
right of a holder of Trust Securities to institute suit for the enforcement of
any such payment on or after such date. (Section 10.03.)

So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Debenture Trustee with respect to

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the Junior Subordinated Debentures, (ii) waive any past default that is waivable
under Section 513 of the Indenture, (iii) exercise any right to rescind or annul
a declaration that the principal of all the Junior Subordinated Debentures shall
be due and payable or (iv) consent to any amendment, modification or termination
of the Indenture or the Junior Subordinated Debentures, where such consent shall
be required, without, in each case, obtaining the prior approval of the holders
of at least a majority in Liquidation Amount of the outstanding Preferred
Securities; provided, however, that where a consent under the Indenture would
require the consent of each holder of Junior Subordinated Debentures affected
thereby, no such consent shall be given by the Property Trustee without the
prior consent of each holder of Preferred Securities. The Trustees shall not
revoke any action previously authorized or approved by a vote of the holders of
Preferred Securities except by subsequent vote of the holders of Preferred
Securities. The Property Trustee shall notify all holders of the Preferred
Securities of any notice of default received from the Debenture Trustee. In
addition to obtaining the foregoing approvals of the holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Trustees shall, at
the expense of ALH, obtain an opinion of counsel experienced in such matters to
the effect that the Issuer will not fail to be classified as a grantor trust for
United States federal income tax purposes on account of such action. (Section
6.01(b).)

Any required approval of holders of Preferred Securities may be given at a
separate meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Administrative Trustees will cause a notice of
any meeting at which holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be taken,
to be given to each holder of record of the outstanding Preferred Securities in
the manner set forth in the Trust Agreement (Sections 6.02 and 6.06.)

No vote or consent of the holders of Preferred Securities will be required
for the Issuer to redeem and cancel Preferred Securities in accordance with the
Trust Agreement.

Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned by ALH, any Trustee or any affiliate of ALH or any
Trustee, shall, for purposes of such vote or consent, be treated as if they were
not outstanding. (Section 1.01.)

CO-TRUSTEES AND SEPARATE TRUSTEE

Unless an Event of Default under the Trust Agreement shall have occurred and
be continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any part
of the Trust Property may at the time be located, the Administrative Trustees
and ALH shall have power to appoint, and upon the written request of the
Administrative Trustees, ALH, as Depositor, shall for such purpose join with the
Administrative Trustees in the execution, delivery, and performance of all
instruments and agreements necessary or proper to appoint one or more persons or
entities approved by the Property Trustee either to act as co-trustee, jointly
with the Property Trustee, of all or any part of such Trust Property, or to act
as separate trustee of any such property, in either case with such powers as may
be provided in the instrument of appointment, and to vest in such person(s) or
entity(s) in such capacity, any property, title, right or power deemed necessary
or desirable, subject to the provisions of the Trust Agreement. If the Depositor
does not join in such appointment within 15 days after the receipt by it of a
request so to do, or in case a Debenture Event of Default has occurred and is
continuing, the Property Trustee alone shall have power to make such
appointment. (Section 8.09.) "Trust Property" means (a) the Junior Subordinated
Debentures, any cash on deposit in, or owing to, the payment account maintained
by the Property Trustee, (c) all proceeds and rights in respect of the foregoing
and any other property and assets for the time being held or deemed to be held
by the Property Trustee pursuant to the trusts of the Trust Agreement and (d)
the rights of the Property Trustee under the Guarantee.

PAYMENT AND PAYING AGENCY

Payments of distributions in respect of the Preferred Securities shall be
made to DTC (so long as the Preferred Securities are held by DTC), which shall
credit the relevant persons' accounts at DTC on the

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applicable Distribution Dates or, if the Preferred Securities are not held by
DTC, such payments shall be made by check mailed to the address of the person
entitled thereto as such address shall appear on the Security Register. The
Paying Agent shall initially be Wilmington Trust Company, and any co-paying
agent chosen by Wilmington Trust Company and acceptable to the Administrative
Trustees and ALH. The Paying Agent shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Administrative Trustees, the Property
Trustee and ALH. In the event that Wilmington Trust Company shall no longer be
the Paying Agent or a successor Paying Agent shall resign or its authority to
act be revoked, the Administrative Trustees shall appoint a successor to act as
Paying Agent (which shall be a bank or trust company acceptable to the Property
Trustee and ALH). (Sections 4.04 and 5.09.)

BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY

DTC will act as securities depositary for the Preferred Securities. The
Preferred Securities will be issued only as fully registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global Preferred Security certificates will be issued,
representing in the aggregate the total number of Preferred Securities, and will
be deposited with DTC. (Section 5.11.)

DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange,
Inc. (the "New York Stock Exchange"), the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain custodial relationships with Direct
Participants, either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the Commission.

Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Preferred Securities, unless use of the book-entry
system for the Preferred Securities is discontinued.

DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.

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Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce the amount of the
interest of each Direct Participant in such Preferred Securities in accordance
with its procedures. DTC's current practice is to determine by lot the amount of
the interest of each Direct Participant to be redeemed.

Although voting with respect to the Preferred Securities is limited to the
holders of record of the Preferred Securities, in those cases where a vote is
required, neither DTC nor Cede & Co. will itself consent or vote with respect to
Preferred Securities. Under its usual procedures, DTC would mail an omnibus
proxy to the Property Trustee as soon as possible after the record date. The
omnibus proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Preferred Securities are credited on the
record date (identified in a listing attached to the omnibus proxy).

Distribution payments on the Preferred Securities will be made by the Issuer
to DTC. DTC's practice is to credit Direct Participants' accounts on the
relevant payment date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive payments
on such payment date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices and will be the
responsibility of such Participant and not of DTC, the Issuer or ALH, subject to
any statutory or regulatory requirements as may be in effect from time to time.
Payment of distributions to DTC is the responsibility of the Issuer,
disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursements of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving 90 days' prior written
notice to the Issuer, the Trustees and the registrar and transfer agent. If DTC
stops providing such service and a successor securities depositary is not
obtained, Preferred Security certificates must be printed and delivered.
Additionally, ALH could decide to discontinue use of the system of book-entry
transfers through DTC (or a successor depositary). After a Debenture Event of
Default, the holders of a majority in Liquidation Amount of the Preferred
Securities may determine to discontinue the system of book-entry transfers
through DTC. In any such event, definitive certificates for the Preferred
Securities will be printed and delivered.

The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuer and ALH believe to be reliable.
Neither the Issuer nor ALH has any responsibility for the performance by DTC or
its Participants of their respective obligations as described hereunder or under
the rules and procedures governing their respective operations.

REGISTRAR AND TRANSFER AGENT

Wilmington Trust Company will act as registrar and transfer agent for the
Preferred Securities. (Section 5.04.)

Registration of transfers and exchanges of Preferred Securities will be
effected without charge by or on behalf of the Issuer, but the Securities
Registrar may require payment (with the giving of such indemnity as the Issuer
or ALH may require) of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange. The
Security Registrar will not be required to register the transfer of any
Preferred Securities that have been called for redemption. (Section 5.04.)

MISCELLANEOUS

The Issuer intends to have the Preferred Securities approved for listing on
the New York Stock Exchange under the symbol .

Holders of the Preferred Securities have no preemptive or similar rights.
(Section 5.14(a).)

The Issuer may not borrow money or issue debt or mortgage or pledge any of
its assets.

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DESCRIPTION OF THE GUARANTEE

Set forth below is a summary of information concerning the Guarantee that
will be executed and delivered by ALH for the benefit of the holders from time
to time of the Preferred Securities. The Guarantee will be qualified under the
Trust Indenture Act, and Wilmington Trust Company will act as indenture trustee
(the "Guarantee Trustee") under the Guarantee for purposes of compliance with
the Trust Indenture Act. The terms of the Guarantee will be those set forth in
such Guarantee and those made part of such Guarantee by the Trust Indenture Act.
This summary does not purport to be complete and is subject in all respects to
the provisions of, and is qualified in its entirety by reference to, the
Guarantee, which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part, and the Trust Indenture Act. Whenever particular
provisions in the Guarantee are referred to herein, such provisions are
incorporated by reference herein. Section references used herein are references
to provisions of the Guarantee unless otherwise noted. The Guarantee Trustee
will hold the Guarantee for the benefit of the holders of the Preferred
Securities.

GENERAL

ALH will irrevocably and unconditionally agree, to the extent set forth
herein, to pay the Guarantee Payments (as defined below) in full to the holders
of the Preferred Securities (without duplication of amounts theretofore paid by
or on behalf of the Issuer), as and when due, regardless of any defense, right
of set-off or counterclaim which the Issuer may have or assert. The following
payments with respect to Preferred Securities, to the extent not paid by or on
behalf of the Issuer (the "Guarantee Payments"), will be subject to the
Guarantee (without duplication): (i) any accrued and unpaid distributions
required to be paid on the Preferred Securities, to the extent the Issuer shall
have funds available therefor at such time, (ii) the Redemption Price with
respect to any Preferred Securities called for redemption by the Issuer, to the
extent the Issuer shall have funds available therefor at such time, and (iii)
upon a voluntary or involuntary dissolution, winding-up or termination of the
Issuer (other than in connection with a redemption of all of the outstanding
Preferred Securities or the distribution of Junior Subordinated Debentures to
the holders of Preferred Securities as provided in the Trust Agreement), the
lesser of (a) the aggregate of the Liquidation Amount and all accrued and unpaid
distributions on the Preferred Securiites to the date of payment to the extent
the Issuer shall have funds available therefor at such time and (b) the amount
of assets of the Issuer remaining available for distribution to holders of
Preferred Securities in liquidation of the Issuer. ALH's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
ALH to the holders of Preferred Securities or by causing the Issuer to pay such
amounts to such holders. (Section 5.01.)

The Guarantee will be a full and unconditional guarantee on a subordinated
basis with respect to the Preferred Securities issued by the Issuer from the
time of issuance of the Preferred Securities, but will not apply to any payment
of distributions if and to the extent that the Issuer does not have funds
sufficient to make such payments or to collection of payment. If ALH does not
make interest payments on the Junior Subordinated Debentures held by the Issuer,
it is expected that the Issuer will not pay distributions on the Preferred
Securities. The Guarantee will rank subordinate and junior in right of payment
to all Senior Debt of ALH.

"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to ALH whether or not such claim for
post-petition interest is allowed in such proceeding), on Debt, whether incurred
on or prior to the date of the Guarantee or thereafter incurred, unless, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are not superior in right of
payment to the Guarantee or to other Debt which is PARI PASSU with, or
subordinated to, the Guarantee; PROVIDED, however, that Senior Debt shall not be
deemed to include (i) any Debt of ALH which, when incurred and without respect
to any election under Section 1111(b) of the Bankruptcy Code, was without
recourse to ALH, (ii) any Debt of ALH to any of its subsidiaries, (iii) Debt to
any employee of ALH, (iv) any liability for taxes, (v) Debt or other monetary
obligations to trade creditors or assumed by ALH or any of its subsidiaries in
the ordinary course of business in

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connection with the obtaining of goods, materials or services, (vi) Debt issued
under the Indenture, and (vii) the Guarantee. "Debt" for purposes of the
Guarantee, has the same meaning as that specified under "Description of the
Junior Subordinated Debentures--Subordination" below.

ALH's obligations under the Trust Agreement, the Guarantee, the Indenture,
the Junior Subordinated Debentures and the Expense Agreement in the aggregate
provide a full and unconditional guarantee on a subordinated basis by ALH of
payments due on the Preferred Securities. See "--Status of the Guarantee."

ALH is a non-operating holding company and substantially all of the
operating assets of ALH and its consolidated subsidiaries are owned by such
subsidiaries, principally AmerUs Life. ALH relies primarily on the receipt of
sufficient funds from AmerUs Life in the form of dividends, interest payments or
loans to meet its obligations for payment of principal and interest on
outstanding debt obligations and corporate expenses. Accordingly, ALH's
obligations under the Guarantee will be effectively subordinated to all existing
and future liabilities of ALH's subsidiaries, and claimants should look only to
the assets of ALH for payments thereunder. The payment of dividends by AmerUs
Life is limited by Iowa law. AmerUs Life has the ability to loan funds to ALH
subject to certain regulatory restrictions. See "Risk Factors--Ranking of
Subordinated Obligations under the Guarantee and the Junior Subordinated
Debentures" and "Supervision and Regulation--Regulation of AmerUs Life."

CERTAIN COVENANTS OF ALH

In the Guarantee, ALH will covenant that, so long as any Preferred
Securities remain outstanding, ALH will not, and will cause its subsidiaries not
to, (a) declare or pay any dividends or distributions on (other than dividends
or distributions in Common Stock of ALH), or redeem, purchase, acquire or make a
liquidation payment with respect to, any of ALH's outstanding capital stock or
(b) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities that rank pari passu with or junior to
the Junior Subordinated Debentures or make any guarantee payments with respect
to the foregoing if at such time (i) ALH shall be in default with respect to its
Guarantee Payments under the Guarantee, (ii) there shall have occurred and be
continuing any Debenture Event of Default or (iii) ALH shall have given notice
of its selection of an Extension Period and such period, or any extension
thereof, is continuing. (Section 6.01.)

AMENDMENTS AND ASSIGNMENT

Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities (in which case no consent of holders of
Preferred Securities will be required), the terms of the Guarantee may be
amended only with the prior approval of the holders of not less than a majority
of the Liquidation Amount of the outstanding Preferred Securities. (Section
8.02.) All guarantees and agreements contained in the Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of ALH and shall
inure to the benefit of the holders of the Preferred Securities then
outstanding. (Section 8.01.)

EVENTS OF DEFAULT

An event of default under the Guarantee (a "Guarantee Event of Default")
will occur upon the failure of ALH to perform any of its payment or other
obligations thereunder; provided, however, that, except with respect to a
default in payment of any Guarantee Payments, ALH shall have received notice of
default and shall not have cured such default within 60 days after receipt of
such notice. (Section 1.01.) The holders of a majority in Liquidation Amount of
the Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or exercising any trust or power conferred upon the
Guarantee Trustee under the Guarantee. (Section 5.04.)

Any holder of Preferred Securities may institute a legal proceeding directly
against ALH to enforce the holder's rights under such Guarantee without first
instituting a legal proceeding against the Issuer, the Guarantee Trustee or any
other person or entity. (Section 5.04.)

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ALH will be required to provide annually to the Guarantee Trustee an
officer's certificate as to ALH's compliance with all conditions and covenants
under the Guarantee. ALH will also be required to provide annually to the
Guarantee Trustee an officer's certificate as to ALH's compliance with all
conditions precedent, if any, provided for in the Guarantee that relate to any
action to be taken by the Property Trustee at ALH's request. (Sections 2.04 and
2.05.)

INFORMATION CONCERNING THE GUARANTEE TRUSTEE

The Guarantee Trustee, other than during the occurrence and continuance of a
Guarantee Event of Default, undertakes to perform only such duties as are
specifically set forth in the Guarantee and, in case a Guarantee Event of
Default has occurred (that has not been cured or waived), the Guarantee Trustee
must exercise such of the rights and powers vested in it by the Guarantee, and
use the same degree of care and skill in its exercise thereof, as a prudent
individual would exercise or use under the circumstances in the conduct of his
or her own affairs. (Section 3.01(c).) Subject to this provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by the
Guarantee at the request of any holder of Preferred Securities unless it is
provided with reasonable indemnity against the costs, expenses and liabilities
that might be incurred thereby. (Section 3.02.(a)(v).)

TERMINATION OF THE GUARANTEE

The Guarantee will terminate and be of no further force and effect upon (i)
full payment of the Redemption Price of all Preferred Securities, (ii) the
distribution of Junior Subordinated Debentures to holders of Preferred
Securities in exchange for all of the Preferred Securities or (iii) payment in
full of the amounts payable in accordance with the Trust Agreement upon
liquidation of the Issuer. Notwithstanding the foregoing, the Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of Preferred Securities must restore payment of any sums paid
with respect to the Preferred Securities or the Guarantee. (Section 7.01.)

STATUS OF THE GUARANTEE

The Guarantee will constitute an unsecured obligation of ALH and will rank
(i) subordinate and junior in right of payment to all Senior Debt of ALH, (ii)
pari passu with any similar guarantee agreements issued by ALH on behalf of the
holders of preferred securities issued by a business trust or similar entity
whose common securities are owned, directly or indirectly, by ALH and (iii)
senior to ALH's common stock. The Trust Agreement provides that each holder of
Trust Securities by acceptance thereof accepts the subordination provisions and
other terms of the Guarantee.

The Guarantee will constitute a guarantee of payment and not merely of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the guarantor to enforce its rights under the guarantee without first
instituting a legal proceeding against any other person or entity). (Section
5.05.)

The Guarantee will be held for the benefit of the holders of the Preferred
Securities. The Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the Issuer or upon
distribution to the holders of the Preferred Securities of the Junior
Subordinated Debentures. The Guarantee does not place a limitation on the amount
of additional Senior Debt that may be incurred by ALH. ALH expects from time to
time to incur additional indebtedness constituting Senior Debt. (Sections
3.01(a) and 5.05.)

GOVERNING LAW

The Guarantee Agreement will be governed by, and construed in accordance
with, the laws of the State of New York. (Section 8.06.)

THE EXPENSE AGREEMENT

Pursuant to the Expense Agreement entered into by ALH under the Trust
Agreement (the "Expense Agreement"), ALH will irrevocably and unconditionally
guarantee to each person or entity to whom the Issuer is or becomes indebted or
liable, the full payment of any and all indebtedness, expenses or liabilities of
the Issuer (including, without limitation, the fees, expenses and indemnities of
the Trustees), other than obligations of the Issuer to pay to the holders of any
Preferred Securities or other similar interests in the Issuer of the amounts due
such holders pursuant to the terms of the Preferred Securities or such other
similar interests, as the case may be.

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DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES

Set forth below is a description of specific terms of the Junior
Subordinated Debentures in which the Issuer will invest the proceeds of the
issuance and sale of the Trust Securities. The Junior Subordinated Debentures
will be qualified under the Trust Indenture Act. The following description does
not purport to be complete and is qualified in its entirety by reference to the
description in the Indenture, dated as of January , 1997 (the "Indenture"),
between ALH and Wilmington Trust Company, as trustee with respect to the Junior
Subordinated Debentures (the "Debenture Trustee"), which is filed as an exhibit
to the Registration Statement of which this Prospectus forms a part, and the
Trust Indenture Act. Whenever particular provisions in the Indenture are
referred to herein, such provisions are incorporated by reference herein.
Section references used herein are references to provisions of the Indenture
unless otherwise noted.

Under certain circumstances involving the termination of the Issuer, Junior
Subordinated Debentures may be distributed to the holders of the Preferred
Securities in exchange for the Preferred Securities in liquidation of the
Issuer. See "Description of the Preferred Securities--Redemption-- Special Event
Redemption or Distribution" and "Description of the Preferred
Securities--Liquidation upon Termination."

GENERAL

The Junior Subordinated Debentures will be limited in aggregate principal
amount to a sum equal to the aggregate stated Liquidation Amount of the
Preferred Securities plus ALH's concurrent investment in the Common Securities.
The Junior Subordinated Debentures will be unsecured, subordinated obligations
of ALH which rank junior to all ALH's Senior Debt (as defined below).

The Junior Subordinated Debentures will initially mature on ,
2027 (the initial Stated Maturity date). The Company shall have the right to (i)
change the Stated Maturity of the Junior Subordinated Debentures upon the
liquidation of the Issuer and the exchange of the Junior Subordinated Debentures
for the Preferred Securities of the Issuer, and (ii) extend the Stated Maturity
of the Junior Subordinated Debentures at any time at the election of ALH for one
or more periods, but in no event to a date later than , 2046,
provided that at the time any election to extend the Stated Maturity is made and
at the time of such extension (i) ALH is not in bankruptcy, otherwise insolvent
or in liquidation, (ii) ALH is not in default in the payment of any interest or
principal on the Junior Subordinated Debentures and no deferred interest
payments thereon have accrued, (iii) the Issuer is not in arrears on payments of
distributions on Preferred Securities and no deferred distributions thereon are
accumulated, (iv) the Junior Subordinated Debentures are rated not less than
BBB- by Standard & Poor's Ratings Group or Baa3 by Moody's Investors Service,
Inc. or the equivalent by any other nationally recognized statistical rating
organization and (v) the extended Stated Maturity is no later than the 49th
anniversary of the initial issuance of the Preferred Securities; provided,
however, that, if ALH exercises its right to liquidate the Issuer and exchange
the Junior Subordinated Debentures for the Preferred Securities as specified
above, effective upon such exercise the Stated Maturity of the Junior
Subordinated Debentures may be changed to any date elected by ALH that is (i) no
earlier than the date five years after the initial issuance of the Preferred
Securities and (ii) no later than the date 30 years (plus an extended term of up
to an additional 19 years if the above-referenced conditions are satisfied)
after the date of the initial issuance of the Preferred Securities. (Section
301.) ALH will seek to have the Junior Subordinated Debentures rated by Standard
& Poor's, Moody's and/or another nationally recognized statistical rating
organization in the event of any extension.

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assets of ALH for payment thereunder. The payment of dividends by AmerUs Life is
limited by Iowa insurance law. AmerUs Life has the ability to loan funds to ALH
subject to certain regulatory restrictions. See "Risk Factors--Ranking of
Subordinated Obligations Under the Guarantee and the Junior Subordinated
Debentures" and "Supervision and Regulation--Regulation of AmerUs Life."

OPTIONAL REDEMPTION

On or after , 2002, ALH will have the right at any time and from
time to time to redeem the Junior Subordinated Debentures, in whole or in part,
at a Redemption Price equal to 100% of the principal amount of the Junior
Subordinated Debentures being redeemed plus any accrued but unpaid interest
thereon to the Redemption Date. (Section 1207.)

If a Special Event shall occur and be continuing, ALH shall have the right
to redeem the Junior Subordinated Debentures, in whole but not in part, at a
Redemption Price equal to 100% of the principal amount of Junior Subordinated
Debentures then outstanding plus any accrued and unpaid interest to the
Redemption Date. (Section 1207.)

Junior Subordinated Debentures in denominations larger than $25 may be
redeemed in part but only in integral multiples of $25 (Section 1203.). Unless
ALH defaults in payment of the Redemption Price, on and after the Redemption
Date interest ceases to accrue on such Junior Subordinated Debentures or
portions thereof called for redemption. (Section 1206.)

For so long as the Issuer is the holder of all the outstanding Junior
Subordinated Debentures, the proceeds of any such redemption described above
will be used by the Issuer to redeem Preferred Securities in accordance with
their terms. ALH may not redeem the Junior Subordinated Debentures in part
unless all accrued and unpaid interest has been paid in full on all outstanding
Junior Subordinated Debentures for all quarterly interest periods terminating on
or prior to the Redemption Date. (Section 1207.)

Any optional redemption of the Junior Subordinated Debentures shall be made
upon not less than 30 nor more than 60 days' notice, as provided in the
Indenture. (Section 1204.)

DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES

Under certain circumstances involving the termination of the Issuer, Junior
Subordinated Debentures may be distributed to the holders of the Preferred
Securities in liquidation of the Issuer after the satisfaction of liabilities to
creditors of the Issuer as provided by applicable law. If distributed to holders
of Preferred Securities in liquidation, the Junior Subordinated Debentures will
initially be issued in the form of one or more global securities and DTC, or any
successor depositary for the Preferred Securities will act as depositary for the
Junior Subordinated Debentures. It is anticipated that the depositary
arrangements for the Junior Subordinated Debentures would be substantially
identical to those in effect for the Preferred Securities. If the Junior
Subordinated Debentures are distributed to the holders of Preferred Securities
upon the liquidation of the Issuer, ALH will use its best efforts to list the
Junior Subordinated Debentures on the New York Stock Exchange or such other
stock exchanges or other self regulatory organizations, if any, on which the
Preferred Securities are then listed. There can be no assurance as to the market
price of any Junior Subordinated Debentures that may be distributed to the
holders of the Preferred Securities. See "Description of the Preferred
Securities--Redemption--Special Event Redemption or Distribution of Junior
Subordinated Debentures" and "--Liquidation Distribution upon Termination. For a
description of DTC and the terms of the depositary matters, see "Description of
the Preferred Securities--Book-Entry-Only Issuance--The Depositary Trust
Company."

INTEREST

The Junior Subordinated Debentures shall bear interest at the rate of %
per annum. Such interest is payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year (each, an "Interest Payment Date"),
commencing March 31, 1997, to the person in whose name each Junior Subordinated
Debenture is registered at the close of business on the fifteenth day next

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preceding such Interest Payment Date. (Sections 301 and 307.) It is anticipated
that, until the liquidation, if any, of the Issuer, each Junior Subordinated
Debenture will be held in the name of the Property Trustee in trust for the
benefit of the Issuer and the holders of the Preferred Securities.

The amount of interest payable for any period will be computed on the basis
of a 360 day year of twelve 30 day months. (Section 310). In the event that any
date on which interest is payable on the Junior Subordinated Debentures is not a
Business Day (as defined above), then payment of the interest payable on such
date will be made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such delay), except that, if
such Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same force
and effect as if made on the date the payment was originally payable. Accrued
interest that is not paid on the applicable Interest Payment Date will bear
additional interest on the amount thereof (to the extent permitted by law) at
the rate per annum of % thereof, compounded quarterly. The term "interest"
as used herein shall include quarterly interest payments, interest on quarterly
interest payments not paid on the applicable Interest Payment Date and
Additional Sums (as described below), as applicable. (Section 301.)

OPTION TO EXTEND INTEREST PAYMENT PERIOD

So long as no Event of Default under the Indenture has occurred and is
continuing, ALH shall have the right at any time during the term of the Junior
Subordinated Debentures to defer the payment of interest on such Junior
Subordinated Debentures from time to time for a period not exceeding 20
consecutive quarters (each, an "Extension Period") during which Extension
Periods interest will compound quarterly, provided that no Extension Period may
extend beyond the Stated Maturity of the Junior Subordinated Debentures. The
Company shall have the right to make partial payments of interest on any
Interest Payment Date. At the end of any such Extension Period, ALH must pay all
interest then accrued and unpaid. During an Extension Period, interest will
continue to accrue and holders of Junior Subordinated Debentures (or holders of
Preferred Securities while outstanding) will be required to accrue interest
income for United States federal income tax purposes. See "United States Federal
Income Taxation--Original Issue Discount." However, during any such Extension
Period, ALH shall not, and shall cause any Subsidiary of ALH not to, (a) declare
or pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of ALH's capital stock or (b) make any
payment of principal, interest or premium, if any, on or repay, repurchase or
redeem any debt securities of ALH that rank pari passu with or junior in
interest to the Junior Subordinated Debentures or make any guarantee payments
with respect to any guarantee by ALH of the debt securities of any subsidiary of
ALH that by their terms rank PARI PASSU or junior in interest to the Junior
Subordinated Debentures (other than (a) dividends or distributions in Common
Stock of ALH, (b) payments under the Guarantee, and (c) purchases of Common
Stock related to the issuance of Common Stock under any of ALH's benefit plans
for its directors, officers or employees). Prior to the termination of any such
Extension Period, ALH may further extend the interest payment period, provided
that such Extension Period, together with all such previous and further
extensions thereof, shall not exceed 20 consecutive quarters or extend beyond
the Stated Maturity of the Junior Subordinated Debentures. Upon the termination
of any Extension Period on any Interest Payment Date, and the payment of all
amounts then due, ALH may elect to begin a new Extension Period, subject to the
above requirements. No interest shall be due and payable during an Extension
Period, except at the end thereof. ALH must give the Debenture Trustee and the
holders of the Junior Subordinated Debentures notice of its election to begin
any Extension Period at least one Business Day prior to the earlier of (i) the
Interest Payment Date or (ii) the date the distributions on the Preferred
Securities are payable or (iii) the date the Administrative Trustees are
required to give notice to the New York Stock Exchange, the Nasdaq National
Market or other applicable self-regulatory organization or to holders of the
Preferred Securities of the record date or the date such distributions are
payable, but in any event not less than one Business Day prior to such record
date. The Debenture Trustee shall give notice of ALH's election to begin any
Extension Period to the holders of the outstanding Preferred Securities. There
is no limitation on the number of times that ALH may elect to begin an Extension
Period. (Section 301.)

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SET-OFF

Notwithstanding anything to the contrary in the Indenture, ALH shall have
the right to set-off any payment it is otherwise required to make thereunder
with respect to any Junior Subordinated Debenture and to the extent ALH has
theretofore made, or is concurrently on the date of such payment making, a
payment under the Guarantee or under the provisions of the Indenture which
permit any holder of the Preferred Securities, upon the occurrence of a
Debenture Event of Default (as defined below) relating to nonpayment of interest
or principal on the Junior Subordinated Debentures. (Section 311.) This
provision prevents double collection from ALH of identical amounts due under the
various provisions of the Indenture and the Guarantee. To the extent ALH makes a
payment of unpaid distributions to holders of Preferred Securities under the
Guarantee, ALH is not then also required to make a like payment of interest on
the Junior Subordinated Debentures (since such interest payment would be paid
out to such holders as the same unpaid distribution). Likewise, if holders of
Preferred Securities bring an action directly against ALH under the Indenture
and collect unpaid distributions in such action, ALH may deduct the amounts so
paid from any aggregrate amount it owes on the Junior Subordinated Debentures.
Therefore, to the extent ALH makes payments directly to holders of Preferred
Securities under the Guarantee or the Indenture, the Property Trustee may not
also collect such amounts under the Junior Subordinated Debentures.

SUBORDINATION

The Junior Subordinated Debentures are subordinate and junior in right of
payment to all Senior Debt (as defined below) of ALH as provided in the
Indenture. No payment or distribution on account of principal of (or premium, if
any) or interest, if any, on, the Junior Subordinated Debentures or on account
of the purchase or other acquisition of Junior Subordinated Debentures by ALH or
any subsidiary may be made (a) in the event and during the continuation of any
default in the payment of principal of (or premium, if any) or interest on any
Senior Debt, or if the maturity of any Senior Debt has been accelerated because
of a default until such event of default shall have been cured or waived or
shall have ceased to exist and such acceleration shall have been rescinded or
annulled, or (b) in the event of any judicial proceeding with respect to any
such default in payment or such event of default. (Section 1104.) In the case of
the pendency of any liquidation, reorganization, bankruptcy, insolvency,
receivership, arrangement, adjustment, composition or other judicial proceeding
relative to ALH, all principal of, and premium, if any, and interest, if any, on
all Senior Debt must be paid in full or provision must be made for such payment
in cash or cash equivalents or otherwise in a manner satisfactory to the holders
of Senior Debt, before the holders of the Junior Subordinated Debentures are
entitled to receive or retain any payment or distribution thereon. (Section
1102.) Subject to the prior payment of all Senior Debt, the rights of the
holders of the Junior Subordinated Debentures will be subrogated to the rights
of the holders of Senior Debt to the extent of the payments or distributions
made to the holders of such Senior Debt until all amounts owing on the Junior
Subordinated Debentures are paid in full. (Section 1106.)

"Debt" means with respect to any entity, whether recourse is to all or a
portion of the assets of such entity and whether or not contingent, (i) every
obligation of such entity for money borrowed; (ii) every obligation of such
entity evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such entity with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such entity; (iv) every obligation of such entity issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such entity; and (vi) every
obligation of the type referred to in clauses (i) through (v) of another entity
and all dividends of another entity the payment of which, in either case, such
entity has guaranteed or is responsible or liable for, directly or indirectly,
as obligor or otherwise. (Section 101.)

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"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to ALH whether or not such claim for
post-petition interest is allowed in such proceeding), on Debt, whether incurred
on or prior to the date of the Indenture or thereafter incurred, unless, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are not superior in right of
payment to the Junior Subordinated Debentures or to other Debt which is PARI
PASSU with, or subordinated to, the Junior Subordinated Debentures; PROVIDED,
however, that Senior Debt shall not be deemed to include (i) any Debt of ALH
which, when incurred and without respect to any election under Section 1111(b)
of the Bankruptcy Code, was without recourse to ALH, (ii) any Debt of ALH to any
of its subsidiaries, (iii) Debt to any employee of ALH, (iv) any liability for
taxes, (v) Debt or other monetary obligations to trade creditors or assumed by
ALH or any of its subsidiaries in the ordinary course of business in connection
with the obtaining of goods, materials or services, and (vi) the Junior
Subordinated Debentures.

ALH is a non-operating holding company and substantially all of the
operating assets of ALH and its consolidated subsidiaries are owned by such
subsidiaries, principally AmerUs Life. ALH relies primarily on the receipt of
sufficient funds from AmerUs Life in the form of dividends, interest payments or
loans to meet its obligations for payment of principal and interest on its
outstanding debt obligations and corporate expenses. Accordingly, ALH's
obligations under the Junior Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of ALH's subsidiaries,
including liabilities under contracts of insurance and annuities written by
AmerUs Life. Holders of Junior Subordinated Debentures should look only to the
assets of ALH for payments of interest and principal and premium, if any. The
payment of dividends by AmerUs Life is limited by Iowa insurance law. AmerUs
Life has the ability to loan funds to ALH subject to certain regularity
restrictions. See "Risk Factors--Ranking of Subordinate Obligations under the
Guarantee and the Junior Subordinated Debentures."

The Indenture does not limit the aggregate amount of Senior Debt that may be
issued. After the completion of this Preferred Offering and the Common Stock
Offerings and the repayment of debt with the proceeds thereof, the Company will
have approximately $104 million of principal amount of indebtedness for borrowed
money and capital lease obligations constituting Senior Debt. The Company
expects from time to time to incur additional indebtedness constituting Senior
Debt.

CERTAIN COVENANTS OF ALH

ALH will covenant in the Indenture that if and so long as (i) the Issuer is
the holder of all of the outstanding Junior Subordinated Debentures, (ii) a Tax
Event (as defined above) has occurred and is continuing and (iii) ALH has not
redeemed the Junior Subordinated Debentures pursuant to the Indenture or
terminated the Issuer pursuant to the Trust Agreement, ALH will pay to the
Issuer, for so long as the Issuer is the registered holder of any Junior
Subordinated Debentures, such additional amounts as may be necessary in order
that the amount of distributions then due and payable by the Issuer on the
outstanding Preferred Securities and Common Securities of the Issuer shall not
be reduced as a result of any additional taxes, duties and other governmental
charges to which the Issuer has become subject from time to time as a result of
a Tax Event (the "Additional Sums"). (Section 1005). ALH will also covenant that
it will not, and it will not permit any subsidiary to, (a) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of ALH's outstanding capital stock or
(b) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities that rank pari passu with or junior to
the Junior Subordinated Debentures or make any guarantee payments with respect
to any guarantee by ALH of the debt securities of any subsidiary of ALH that by
their terms rank pari passu or junior in interest to the Junior Subordinated
Debentures, (other than (a) dividends or distributions in Common Stock of ALH,
(b) payments under the Guarantee, and (c) purchases of Common Stock related to
the issuance of Common Stock under any of ALH's benefit plans for its directors,
officers or employees) if at such time (i) there shall have occurred and be
continuing any event that, with the giving of notice or the lapse of time, or
both, would constitute a Debenture Event of Default and in respect of which ALH
shall not have taken reasonable steps to cure, (ii) ALH shall be in default with
respect to its payment of any obligations

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under the Guarantee or (iii) ALH shall have given notice of its selection of an
Extension Period as provided in the Indenture and shall not have rescinded such
notice and such Extension Period, or any extension thereof, shall be continuing
(Section 1006.) ALH will also covenant (i) to maintain directly or indirectly
100% ownership of the Common Securities of the Issuer (provided, however, that
any permitted successor of ALH may succeed to such ownership), (ii) not to
voluntarily dissolve, wind-up or terminate the Issuer, except in connection with
a distribution of the Junior Subordinated Debentures to the holders of the
Preferred Securities in exchange for the Preferred Securities and in liquidation
of the Issuer or in connection with certain mergers, consolidations or
amalgamations permitted by the Trust Agreement and (iii) to use its reasonable
efforts, consistent with the terms and provisions of the Trust Agreement, to
cause the Issuer to remain a business trust and to be classified as a grantor
trust for United States federal income tax purposes, except in connection with a
distribution of the Junior Subordinated Debentures to the holders of the
Preferred Securities exchange for the Preferred Securities and in liquidation of
the Issuer. (Section 1006.)

DEBENTURE EVENTS OF DEFAULT AND CONSEQUENT RIGHTS OF CERTAIN HOLDERS

The Indenture provides that any one or more of the following described
events, that has occurred and is continuing constitutes an "Event of Default"
(also referred to herein as a "Debenture Event of Default") with respect to the
Junior Subordinated Debentures:

(a) failure for 30 days to pay interest on the Junior Subordinated
Debentures when due (subject to the deferral of any due date in the case of
an Extension Period); or

(b) failure to pay principal on the Junior Subordinated Debentures when
due whether at Stated Maturity, upon redemption, by declaration or
otherwise; or

(c) failure to observe or perform in any material respect any other
covenant contained in the Indenture for 90 days after written notice to ALH
from the Debenture Trustee or the holders of at least 25% in aggregate
principal amount of the outstanding Junior Subordinated Debentures; or

(d) certain events in bankruptcy, insolvency or reorganization of ALH.
(Section 501.)

Each of the above events is a Debenture Event of Default regardless of the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body. (Section 501.) There is no requirement that
any such event must be declared by anyone to be a Debenture Event of Default.

The holders of a majority in principal amount of the outstanding Junior
Subordinated Debentures have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee,
under certain conditions. (Section 512.)

ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT

The Debenture Trustee or the holders of not less then 25% in principal
amount of the outstanding Junior Subordinated Debentures may declare the
principal of all the Junior Subordinated Debentures due and payable immediately
upon the occurrence and continuation of a Debenture Event of Default, and should
the Debenture Trustee or such holders of Junior Subordinated Debentures fail to
make such declaration, the holders of at least 25% in aggregate Liquidation
Amount of Preferred Securities then outstanding shall have such right. The
holders of a majority in principal amount of the outstanding Junior Subordinated
Debentures may rescind and annul such declaration and its consequences if all
Events of Default have been cured or waived (other than the non-payment of the
principal of the Junior Subordinated Debentures which has become due solely by
such acceleration) and a sum sufficient to pay all overdue installments of
interest, principal due otherwise than by acceleration (including any applicable
premium) and certain sums due to the Debenture Trustee have been deposited with
the Debenture

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Trustee. If the holders of a majority in principal amount of the outstanding
Junior Subordinated Debentures fail to annul such declaration and its
consequences, the holders of a majority in aggregate Liquidation Amount of the
Preferred Securities may rescind and annul such declaration and its
consequences. (Section 502.)

WAIVER OF DEFAULTS

Subject to certain limitations, the holders of not less than a majority in
aggregate principal amount of the outstanding Junior Subordinated Debentures
affected thereby may, on behalf of the holders of all the Junior Subordinated
Debentures, waive any past default under the Indenture and its consequences,
except a default in the payment of principal of or interest on any Junior
Subordinated Debentures (unless such default has been cured and a sum sufficient
to pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee) or a default in
respect of a covenant or provision of the Indenture which under the Indenture
cannot be modified or amended without the consent of the holder of each
outstanding Junior Subordinated Debenture affected. If the holders of such
Junior Subordinated Debentures fail to waive such default, the holders of a
majority in aggregate Liquidation Amount of the Preferred Securities shall have
such right. (Section 513.) ALH is required to deliver annually to the Debenture
Trustee a certificate stating whether or not to the best knowledge of the
signers thereof ALH is in default in the performance, observance or fulfillment
of or compliance with any of the material terms, provisions, covenants and
conditions of the Indenture (without regard to any period of grace or
requirement of notice provided under the Indenture) and, if ALH shall be in
default, specifying all such defaults and the nature and status thereof of which
they may have knowledge. (Section 1004.)

CREDITOR'S RIGHTS OF THE DEBENTURE TRUSTEE

In case a Debenture Event of Default shall occur and be continuing, the
Debenture Trustee will have the right to declare the principal of the Junior
Subordinated Debentures to be forthwith due and payable and to enforce its other
rights as a creditor with respect to the Junior Subordinated Debentures. If the
Debenture Trustee obtains a judgment against ALH following the occurrence of a
Debenture Event of Default, the provisions of Iowa law regulating mutual
insurance holding companies would limit the ability of the Debenture Trustee to
realize upon the assets of ALH by conveying or transferring the capital stock of
AmerUs Life owned by ALH. Any conveyance, transfer, assignment or alienation of
a majority of the voting shares of AmerUs Life to an entity which is not a
mutual insurance holding company would violate Iowa law and such voting shares
are not subject to execution and levy. The Debenture Trustee would not be
restricted by such law in disposing of voting shares owned by ALH which exceeded
such majority requirement. See "Supervision and Regulation."

RIGHTS OF HOLDERS OF PREFERRED SECURITIES TO DIRECT ACTION

As explained more fully in the preceding section (see "--Debenture Events of
Default--Waiver of Defaults"), holders of less than all of the outstanding
Junior Subordinated Debentures or holders of less than all of the Preferred
Securities may waive any past default (with certain limited exceptions
identified above). If so waived, any such Debenture Event of Default shall cease
to be "continuing" for purposes of the Indenture. However, such holders may not
waive any default in the payment of principal of or interest on any Junior
Subordinated Debentures unless such default has been cured and a sum sufficient
to payall matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee). If a Debenture
Event of Default has occurred and is continuing and such event is attributable
to the failure of ALH for 30 days to pay interest on or the failure of ALH to
pay principal of the Junior Subordinated Debentures on the date such interest or
principal is otherwise payable, any holder of Preferred Securities may institute
a suit directly against ALH for enforcement of payment to such holder of the
principal of and interest on such Junior Subordinated Debentures having a
principal amount equal to the aggregate Liquidation Amount of the Preferred
Securities of such holder (a "Direct Action") (Section 508). ALH may not amend
the Indenture to remove the foregoing right to bring a Direct Action without the
prior written consent of the holders of all of the outstanding Preferred
Securities. (Section 902).

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The holders of the Preferred Securities would not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the Junior Subordinated Debentures unless there
shall have been a Debenture Event of Default and the holders of the Junior
Subordinated Debentures fail to exercise such remedies. See "--Debenture Events
of Default--Acceleration of Maturity; Rescission and Annulment" and "--Debenture
Events of Default--Waiver of Defaults".

FORM, EXCHANGE AND TRANSFER

The Junior Subordinated Debentures will be issuable only in registered form,
without coupons, and only in denominations of $25 and integral multiples
thereof. (Section 302.)

Subject to the terms of the Indenture, Junior Subordinated Debentures may be
presented for registration of transfer (duly endorsed or with the form of
transfer endorsed thereon duly executed) at the office of the Security Registrar
or at an office or agency of ALH designated by ALH for such purpose. No service
charge will be made to a holder of Junior Subordinated Debentures for any
registration of transfer or exchange of Junior Subordinated Debentures, but ALH
or the Security Registrar may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Such transfer or exchange will be effected upon the Security Registrar or ALH,
as the case may be, being satisfied with the documents of title and identity of
the person making the request. ALH has appointed the Debenture Trustee as
Security Registrar. (Section 305.) ALH may at any time designate additional
transfer agents or rescind the designation of any transfer agent or approve a
change in the office through which any transfer agent acts. (Section 1002.)

Neither ALH nor the Security Registrar will be required (i) to issue,
transfer or exchange any Junior Subordinated Debenture during a period beginning
at the opening of business 15 days before the day of selection for redemption of
any such Junior Subordinated Debentures pursuant to the Indenture and ending at
the close of business on the day of mailing of notice of redemption, or (ii) to
transfer or exchange any Junior Subordinated Debentures so selected for
redemption, in whole or in part, except the unredeemed portion of any such
Junior Subordinated Debentures being redeemed in part. (Section 305.)

PAYMENT AND PAYING AGENTS

Payment of interest on a Junior Subordinated Debenture on any Interest
Payment Date will be made to the person in whose name such Junior Subordinated
Debenture (or predecessor security) is registered at the close of business on
the date 15 days prior to such Interest Payment Date. (Section 307.)

Principal of and any interest on the Junior Subordinated Debentures will be
payable at the office of such Paying Agent or Paying Agents as ALH may designate
for such purpose from time to time, provided, however, that at the option of
ALH, payment of any interest may be made (i) by check mailed to the address of
the person entitled thereto as such address shall appear in the Security
Register or (ii) by wire transfer in immediately available funds at such place
and to such account as may be designated by the person entitled thereto as
specified in the Security Register. Wilmington Trust Company will act as Paying
Agent with respect to the Junior Subordinated Debentures. ALH may at any time
designate additional Paying Agents or rescind the designation of any Paying
Agent or approve a change in the office through which any Paying Agent acts.
(Section 301.)

MODIFICATION OF THE INDENTURE

The Indenture contains provisions permitting ALH and the Debenture Trustee,
with the consent of the holders of not less than a majority in principal amount
of the outstanding Junior Subordinated Debentures, to modify the Indenture in a
manner affecting the rights of the holders of the Junior Subordinated
Debentures; provided, that no such modification may, without the consent of the
holder of each outstanding Junior Subordinated Debenture affected thereby, (i)
subject to the conditions set forth above, change the Stated Maturity of, the
principal of, or any installment of interest on, any Junior Subordinated
Debenture or reduce the principal amount thereof or the rate of interest thereon
or reduce any premium payable upon the redemption thereof, or change the place
of payment where, or the coin or currency in which, any Junior Subordinated
Debenture or interest thereon is payable, or impair the

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right to institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or modify the provisions of the Indenture with respect to the
subordination of the Junior Subordinated Debentures in a manner adverse to
holders thereof (except such change or extension as is contemplated thereby),
(ii) reduce the percentage in principal amount of the outstanding Junior
Subordinated Debentures, the consent of whose holders is required for any waiver
provided for in the Indenture, or (iii) modify certain provisions of the
Indenture providing for waiver of defaults, waiver of covenants and modification
of the Indenture, except to increase the percentage or to provide that certain
other provisions of the Indenture cannot be modified or waived without the
consent of the holder of each outstanding Junior Subordinated Debenture affected
thereby; provided, that, so long as any of the Preferred Securities remains
outstanding, no such modification may be made that adversely affects the holders
of the Preferred Securities, and no termination of the Indenture may occur, and
no waiver of any Debenture Event of Default or compliance with any covenant
under the Indenture shall be effective, without the prior consent of the holders
of at least a majority of the aggregate Liquidation Amount of the outstanding
Preferred Securities unless and until the principal of and any premium on the
Junior Subordinated Debentures and all accrued and unpaid interest thereon have
been paid in full. (Section 902.)

CONSOLIDATION, MERGER AND SALE

ALH, without the consent of the holders of any outstanding Junior
Subordinated Debentures, may consolidate with or merge into, or convey, transfer
or lease its properties and assets substantially as an entirety to any person,
and may permit any person to consolidate with or merge into, or convey, transfer
or lease its properties and assets substantially as an entirety to ALH, provided
(i) that any successor person must be a corporation, partnership, trust or other
entity organized and validly existing under the laws of any domestic
jurisdiction and must expressly assume ALH's obligations on the Junior
Subordinated Debentures and under the Indenture, (ii) that immediately after
giving effect to the transaction no Debenture Event of Default, and no event
which, after notice or lapse of time or both, would become a Debenture Event of
Default, shall have occurred and be continuing, (iii) that such transaction is
permitted under the Trust Agreement and Guarantee and does not give rise to any
breach or violation of, the Trust Agreement or the Guarantee and (iv) that
certain other conditions are met. (Section 801).

The general provisions of the Indenture do not afford holders of Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving ALH that may adversely affect holders of the Junior
Subordinated Debentures. Since the Indenture does not limit the aggregate amount
of Senior Debt that may be issued and the Junior Subordinated Debentures are
subordinate to all Senior Debt, including such Debt incurred after the date of
the Indenture (see "--Subordination" above), if the Company chooses to engage in
a highly leveraged transaction whereby it would incur a substantial amount of
Debt, the obligations under the Junior Subordinated Debentures would become more
deeply subordinated and the holders of the Junior Subordinated Debentures would
not be able to avoid this consequence provided that the conditions set forth in
the immediately preceding paragraph are met. Similarly, the Company could be
involved in a reorganization, restructuring, merger or similar transaction that
could adversely affect the holders of the Junior Subordinated Debentures but,
provided that the conditions set forth in the immediately preceding paragraph
are met, such holders could not avoid such adverse affects.

SATISFACTION AND DISCHARGE

Under the terms of the Indenture, ALH will be discharged from any and all
obligations in respect of the Indenture (except as to (i) any surviving rights
of transfer or exchange of Junior Subordinated Debentures, (ii) rights under the
Indenture of holders of the Junior Subordinated Debentures to receive payments
of principal of (and premium, if any) and interest on the Junior Subordinated
Debentures and other rights, duties and obligations of the holders as
beneficiaries under the Indenture with respect to the amounts, if any, deposited
with the Debenture Trustee pursuant to the discharge provisions of the
Indenture, and (iii) the rights and obligations of the Debenture Trustee under
the Indenture), if the Junior Subordinated Debentures have become due and
payable, or will become due and payable at their Stated Maturity within one year
of the date of deposit or if redeemable at the option of ALH, are to be

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called for redemption within one year under arrangements satisfactory to the
Debenture Trustee and (i) ALH deposits with the Debenture Trustee, in trust,
cash or cash equivalents in an amount sufficient to pay all the principal of,
premium, if any, and interest on the Junior Subordinated Debentures to the date
of such deposit or to the Stated Maturity or Redemption Date, as the case may
be; (ii) ALH pays all other sums payable by ALH under the Indenture, and (iii)
ALH delivers to the Debenture Trustee an appropriate officer's certificate and
opinion of counsel. (Section 401.)

GOVERNING LAW

The Indenture and the Junior Subordinated Debentures will be governed by,
and construed in accordance with, the laws of the State of New York. (Section
112.)

MISCELLANEOUS

ALH will have the right of all times to assign any of its rights or
obligations under the Indenture to a direct or indirect wholly-owned subsidiary
of ALH, provided that, in the event of any such assignment, ALH will remain
liable for all such obligations. The Issuer may not assign any of its rights
under the Indenture without the prior written consent of ALH. The Indenture is
not otherwise assignable by the parties thereto. Subject to the foregoing, the
Indenture will be binding upon and inure to the benefit of the parties thereto
and their respective successors and assigns. (Section 109.)

RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE

FULL AND UNCONDITIONAL GUARANTEE

Payments of distributions and other amounts due on the Trust Securities (to
the extent the Issuer has funds available for the payment of such distributions)
are irrevocably guaranteed by ALH as and to the extent set forth under
"Description of the Guarantee." Taken together, ALH's obligations under the
Junior Subordinated Debentures, the Indenture, the Trust Agreement, the Expense
Agreement, and the Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of distributions and other amounts due on
the Trust Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Issuer's obligations under the Trust Securities. If and to the extent that ALH
does not make payments on the Junior Subordinated Debentures, the Issuer will
not pay distributions or other amounts due on its Trust Securities. The
Guarantee does not cover payment of distributions when the Issuer does not have
sufficient funds to pay such distributions. In such event, the remedy of a
holder of Preferred Securities is to institute a legal proceeding directly
against ALH under the terms of the Indenture for enforcement of payment of such
distributions to such holder. The Indenture likewise provides for such a direct
action by holders of the Junior Subordinated Debentures. The obligations of ALH
under the Guarantee are subordinate and junior in right of payment to all Senior
Debt of ALH.

SUFFICIENCY OF PAYMENTS

As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
distributions and other payments due on the Preferred Securities, primarily
because (i) the aggregate principal amount of the Junior Subordinated Debentures
will be equal to the sum of the aggregate stated Liquidation Amount of the
Preferred Securities and Common Securities; (ii) the interest rate and interest
and other payment dates on the Junior Subordinated Debentures will match the
distribution rate and distribution and other payment dates for the Preferred
Securities; (iii) ALH shall pay for all and any costs, expenses and liabilities
of the Issuer except the Issuer's obligations to holders of its Preferred
Securities under the Preferred Securities; and (iv) the Trust Agreement further
provides that the Issuer will not engage in any activity that is not consistent
with its limited purposes.

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Notwithstanding anything to the contrary in the Indenture, ALH has the right
to set-off any payment it is otherwise required to make thereunder with and to
the extent ALH has theretofore made, or is concurrently on the date of such
payment making, a payment under the Guarantee. See "Description of the Junior
Subordinated Debentures--Set-Off."

ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES

A holder of any Preferred Security may, to the extent permissible under
applicable law, institute a legal proceeding directly against ALH to enforce its
rights under the Guarantee without first instituting a legal proceeding against
the Guarantee Trustee, the Issuer or any other person or entity.

A default or event of default under any Senior Debt of ALH would not
constitute a default or Debenture Event of Default under the Indenture. However,
in the event of payment defaults under, or acceleration of Senior Debt of ALH,
the subordination provisions of the Indenture provide that no payments may be
made in respect of the Junior Subordinated Debentures until such Senior Debt has
been paid in full or any payment default thereunder has been cured or waived.
Failure to make required payments on Junior Subordinated Debentures would
constitute a Debenture Event of Default.

LIMITED PURPOSE OF ISSUER

The Issuer's Preferred Securities evidence a beneficial interest in the
Issuer, and the Issuer exists for the sole purpose of issuing its Preferred
Securities and Common Securities and investing the proceeds thereof in the
Junior Subordinated Debentures. A principal difference between the rights of a
holder of a Preferred Security and a holder of a Junior Subordinated Debenture
is that a holder of a Junior Subordinated Debenture is entitled to receive from
ALH the principal amount of and interest accrued on the Junior Subordinated
Debentures held, while a holder of Preferred Securities is entitled to receive
distributions from the Issuer (or, to the extent such distributions are not made
by or on behalf of the Issuer, from ALH under the Guarantee) if and to the
extent the Issuer has funds available for payment of such distributions.

RIGHTS UPON TERMINATION

Upon any voluntary or involuntary dissolution, winding-up or termination of
the Issuer, the holders of Preferred Securities will be entitled to receive as a
preference, out of assets available for distribution to holders, the Liquidation
Distribution in cash or Junior Subordinated Debentures. See "Description of
Preferred Securities--Liquidation Distribution Upon Dissolution." Upon any
voluntary or involuntary liquidation or bankruptcy of ALH, the Property Trustee,
as holder of the Junior Subordinated Debentures, would be a subordinated
creditor of ALH, subordinated in right of payment to all Senior Debt, but
entitled to receive payment in full of principal, premium, if any, and interest,
before any shareholders of ALH receive payments or distributions. Since ALH is
Guarantor under the Guarantee and has agreed, under the Expense Agreement, to
pay for all indebtedness, expenses and liabilities of the Issuer (other than the
Issuer's obligations to Preferred Security holders under the Preferred
Securities), the positions of a holder of Preferred Securities and a holder of
Junior Subordinated Debentures relative to other creditors and to shareholders
of ALH in the event of liquidation or bankruptcy of ALH would be substantially
the same.

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UNITED STATES FEDERAL INCOME TAXATION

GENERAL

The following is a summary of certain of the material United States federal
income tax consequences of the purchase, ownership and disposition of Preferred
Securities, based upon the opinion of Sidley & Austin, special counsel to ALH.
Unless otherwise stated, this summary deals only with Preferred Securities held
as capital assets by holders that purchase the Preferred Securities upon
original issuance. This summary does not address all the tax consequences that
may be relevant to holders that may be subject to special tax treatment such as,
for example, banks, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, tax-exempt
investors, persons whose functional currency is other than the United States
dollar, persons who hold Preferred Securities as part of a straddle, hedging or
conversion transaction or, except as specifically described herein, foreign
taxpayers. In addition, this summary does not address any aspects of state,
local, or foreign laws. This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations promulgated thereunder and
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change, possibly on a retroactive basis. Each holder
should consult its tax advisor as to its particular tax consequences of
acquiring, holding, and disposing of the Preferred Securities, including the tax
consequences under state, local, and foreign laws.

CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES

It is a condition to the issuance of the Preferred Securities that Sidley &
Austin, special counsel to ALH, render its opinion to the effect that, under
then-current United States federal income tax law, the Junior Subordinated
Debentures held by the Trust will be classified for United States federal income
tax purposes as indebtedness of ALH. Accordingly, corporate holders of Preferred
Securities will not be entitled to a dividends-received deduction with respect
to any income recognized with respect to the Preferred Securities.

CLASSIFICATION OF THE TRUST

It is a condition to the issuance of the Preferred Securities that Sidley &
Austin, special counsel to ALH and the Trust, render its opinion to the effect
that, under then-current United States federal income tax law, the Trust will be
classified for United States federal income tax purposes as a grantor trust and
not as an association taxable as a corporation. Accordingly, for United States
federal income tax purposes, each holder of Preferred Securities will generally
be considered the owner of an undivided interest in the Junior Subordinated
Debentures, and each holder will be required to include in its gross income any
original issue discount ("OID") accrued with respect to its allocable share of
those Junior Subordinated Debentures. Investors should be aware that the
foregoing opinions of Sidley & Austin will not be confirmed by the Internal
Revenue Service (the "Service"), by private ruling or otherwise, and will not be
binding on the Service or the courts. By its acceptance of a Preferred Security,
a holder agrees to treat the Preferred Security and the Junior Subordinated
Debentures consistently with the foregoing opinions.

ORIGINAL ISSUE DISCOUNT

ALH has the option, under the terms of the Junior Subordinated Debentures,
to defer payments of interest by extending interest payment periods for up to 20
quarters. See "Description of the Junior Subordinated Debentures--Option to
Extend Interest Payment Period." Under Treasury regulations, this option should
cause stated interest payments on the Junior Subordinated Debentures to be
treated as OID and ALH intends to so treat the Junior Subordinated Debentures.
Holders of debt instruments issued with OID must include that discount in income
on an economic accrual basis before the receipt of cash attributable to the
discount, regardless of their method of tax accounting. Generally, all of a
holder's taxable interest income with respect to the Junior Subordinated
Debentures will be accounted for as OID, and actual distributions of stated
interest will not be separately reported as taxable income. The amount of OID
that accrues in any quarter will approximately equal the amount of the interest
that accrues on the Junior Subordinated Debentures in that quarter at the stated
interest rate. In the event that the interest payment period is extended,
holders will continue to accrue OID approximately equal to

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the amount of the interest payment due at the end of the extended interest
payment period on an economic accrual basis over the length of the extended
interest period. Under recently issued Treasury regulations, it is possible that
the Junior Subordinated Debentures could be considered to have terms and
conditions that make the likelihood of ALH deferring the payment of interest a
"remote contingency" for purposes of the OID rules. In that event, (a) The
Junior Subordinated Debentures would not be subject to the OID rules at the time
of their original issuance, (b) a holder would include its share of interest on
the Junior Subordinated Debentures in income in accordance with such holder's
regular method of tax accounting, and (c) if ALH were to defer the payment of
interest, the Junior Subordinated Debentures would thereafter generally become
subject to the OID rules described above.

MARKET DISCOUNT AND PREMIUM

Holders of Preferred Securities other than holders that purchased the
Preferred Securities upon original issuance may be considered to have acquired
their undivided interest in the Junior Subordinated Debentures with market
discount, amortizable bond premium or acquisition premium as such terms are
defined for United States federal income tax purposes. Such holders are advised
to consult their tax advisors as to the income tax consequences of the
acquisition, ownership and disposition of the Preferred Securities.

RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST

Under certain circumstances, as described under the caption "Description of
the Preferred Securities--Redemption--Special Event Redemption or Distribution
of Junior Subordinated Debentures" and "--Liquidation Distribution upon
Termination," Junior Subordinated Debentures may be distributed to holders in
exchange for the Preferred Securities and in liquidation of the Trust. Under
current United States federal income tax law, such a distribution would be a
non-taxable event to each holder, and each holder would have an aggregate tax
basis in the Junior Subordinated Debentures equal to such holder's aggregate tax
basis in its Preferred Securities. A holder's holding period in the Junior
Subordinated Debentures so received in liquidation of the Trust would include
the period during which the Preferred Securities were held by such holder.

Under certain circumstances described herein (see "Description of the
Preferred Securities"), the Junior Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption of
their Preferred Securities. Under current United States federal income tax law,
such a redemption would be a taxable event to each holder, and a holder would
recognize gain or loss as if it sold such redeemed Preferred Securities for
cash. See "United States Federal Income Taxation--Sales of Preferred
Securities."

SALES OF PREFERRED SECURITIES

A holder that sells Preferred Securities will recognize gain or loss equal
to the difference between such holder's adjusted tax basis in the Preferred
Securities and the amount realized on the sale of such Preferred Securities. A
holder's adjusted tax basis in the Preferred Securities will generally be the
initial purchase price increased by OID previously includible in such holder's
gross income to the date of disposition and decreased by payments received on
the Preferred Securities. Such gain or loss will generally be capital gain or
loss and will generally be long-term capital gain or loss if the Preferred
Securities have been held for more than one year.

The Preferred Securities may trade at prices that do not accurately reflect
the value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A holder that disposes of Preferred Securities between
record dates for payments of distributions thereon will be required to include
accrued but unpaid interest on the Junior Subordinated Debentures through the
date of disposition in income as ordinary income, and to add such amount to such
holder's adjusted tax basis in the pro rata share of the underlying Junior
Subordinated Debentures deemed disposed of. To the extent that the selling price
is less than the holder's adjusted tax basis (so determined) a holder will
recognize a capital loss. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income tax
purposes.

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UNITED STATES ALIEN HOLDERS

For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the United
States, a foreign corporation, a nonresident alien individual, a foreign
partnership, or a nonresident fiduciary of a foreign estate or trust. The
discussion assumes that income with respect to the Preferred Security is not
effectively connected with a trade or business in the United States in which the
United States Alien Holder is engaged.

Under current United States federal income tax law, and subject to the
discussion of backup withholding in the following section: (1) payments with
respect to principal and interest (including OID) by the Trust or any of its
paying agents to any holder of a Preferred Security that is a United States
Alien Holder will not be subject to withholding of United States federal income
tax; provided that, in the case of interest, (a) the beneficial owner of the
Preferred Security does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of ALH entitled to vote, (b)
the beneficial owner of the Preferred Security is not a controlled foreign
corporation that is related, directly or indirectly, to ALH through stock
ownership, and (c) either (A) the beneficial owner of the Preferred Security
certifies to the Trust or its agent, under penalties of perjury, that it is a
United States Alien Holder and provides its name and address or (B) a securities
clearing organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution"), and holds the Preferred Securities in such capacity, certifies to
the Trust or its agent, under penalties of perjury, that such statement has been
received from the beneficial owner by it or by a Financial Institution between
it and the beneficial owner and furnishes the Trust or its agent with a copy
thereof; and (2) a United States Alien Holder of a Preferred Security will
generally not be subject to withholding of United States federal income tax on
any gain realized upon the sale or other disposition of a Preferred Security.

On April 15, 1996, proposed Treasury Regulation (the "1996 Proposed
Regulations") were issued which, if adopted in final form, could affect the
United States taxation of United States Alien Holders. The 1996 Proposed
Regulations are generally proposed to be effective for payments after December
31, 1997, regardless of the issue date of the instrument with respect to which
such payments are made, subject to certain transition rules. As proposed, the
1996 Proposed Regulations would provide additional procedures for obtaining the
exemption from withholding described above, but generally would not alter the
procedures described above. It cannot be predicted at this time whether the 1996
Proposed Regulations will become effective as proposed or what, if any,
modifications may be made to them. Prospective investors are urged to consult
their tax advisors with respect to the effect the 1996 Proposed Regulations may
have if adopted.

BACKUP WITHHOLDING TAX AND INFORMATION REPORTING

Under current United States federal income tax law, information reporting
requirements apply to interest (including original issue discount) and principal
payments made to, and to the proceeds of sales before maturity by, certain
non-corporate persons. In addition, a 31% backup withholding tax applies if a
non-corporate person (i) fails to furnish such person's Taxpayer Identification
Number ("TIN") (which, for an individual, would be his or her Social Security
Number) to the payor in the manner required, (ii) furnishes an incorrect TIN and
the payor is so notified by the Service, (iii) is notified by the Service that
such person has failed properly to report payments of interest and dividends or
(iv) in certain circumstances, fails to certify, under penalties of perjury,
that such person has not been notified by the Service that such person is
subject to backup withholding for failure properly to report interest and
dividend payments. Backup withholding does not apply with respect to payments
made to certain exempt recipients, such as corporations and tax-exempt
organizations.

In the case of a United States Alien Holder, backup withholding and
information reporting do not apply to payments of principal and interest with
respect to a Preferred Security with respect to which such Holder has provided
the required certification under penalties of perjury that such Holder is a
United States Alien Holder or has otherwise established an exemption, provided
that certain conditions are satisfied.

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In general, (i) principal or interest payments with respect to a Preferred
Security collected outside the United States by a foreign office of a custodian,
nominee or other agent acting on behalf of a beneficial owner of a Preferred
Security and (ii) payments on the sale, exchange or retirement of a Preferred
Security to or through a foreign office of a broker are not subject to backup
withholding or information reporting. However, if such custodian, nominee, agent
or broker is a United States person, a controlled foreign corporation for United
States tax purposes, or a foreign person 50% or more of whose gross income is
effectively connected with the conduct of a United States trade or business for
a specified three-year period, such custodian, nominee, agent or broker may be
subject to certain information reporting (but not backup withholding)
requirements with respect to such payments.

Backup withholding tax is not an additional tax. Rather, any amounts
withheld from a payment to a person under the backup withholding rules are
allowed as a refund or a credit against such person's United States federal
income tax, provided that the required information is furnished to the Service.

POSSIBLE TAX LAW CHANGES

On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill"), the
revenue portion of President Clinton's budget proposal, was released. The Bill
would, among other things, generally deny interest deductions for United States
federal income tax purposes for interest on an instrument, issued by a
corporation, that has a maximum weighted average maturity of more than 40 years.
The Bill would also generally deny interest deductions for interest on an
instrument, issued by a corporation, that has a maximum term of more than 20
years and that is not shown as indebtedness on the separate balance sheet of the
issuer or, where the instrument is issued to a related party (other than a
corporation), where the holder or some other related party issues a related
instrument that is not shown as indebtedness on the issuer's consolidated
balance sheet. For purposes of determining the weighted average maturity or the
term of an instrument, any right to extend would be treated as exercised. The
above-described provisions of the Bill were proposed to be effective generally
for instruments issued on or after December 7, 1995. If either provision were to
apply to the Junior Subordinated Debentures, ALH would be unable to deduct
interest on the Junior Subordinated Debentures for United States federal income
tax purposes. However, on March 29, 1996, the Chairmen of the Senate Finance and
House Ways and Means Committees issued a joint statement to the effect that it
was their intention that the effective date of the President's legislative
proposals, if adopted, will be no earlier than the date of appropriate
Congressional action. ALH believes that, under current law, it will be able to
deduct interest on the Junior Subordinated Debentures. There can be no
assurance, however, that current or future legislative proposals or final
legislation will not affect the ability of ALH to deduct interest on the Junior
Subordinated Debentures. Such a change could give rise to a Tax Event, which may
permit ALH to cause a redemption of the Preferred Securities. See "Description
of the Preferred Securities--Redemption--Special Event Redemption or
Distribution." Such a tax law change would not alter the United States federal
income tax consequences of the purchase, ownership and disposition of Preferred
Securities to holders thereof.

ERISA CONSIDERATIONS

The Employee Retirement Income Security Act of 1974, as amended ("ERISA")
and/or the Code impose certain restrictions on (a) employee benefit plans (as
defined in Section 3(3) of ERISA), (b) plans described in Section 4975(e)(1) of
the Code, including individual retirement accounts or Keogh Plans, (c) any
entities whose underlying assets include plan assets by reason of a plan's
investment in such entities (each of (a), (b) and (c) a "Plan") and (d) persons
who have certain specified relationships to such Plans ("Parties-in-Interest"
under ERISA and Disqualified Persons" under the Code).

ERISA also imposes certain duties on persons who are fiduciaries of Plans
subject to ERISA. In addition, ERISA and the Code prohibit a broad range of
transactions ("Prohibited Transactions") between a Plan and Parties-in-Interest
or Disqualified Persons with respect to such Plans.

A regulation issued under ERISA (the "ERISA Regulation") provides that
assets of an entity will not be plan assets of a Plan which purchases an equity
interest in the entity if the equity interest is a

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"publicly-offered security" (the "Publicly-Offered Security Exception") or
certain exceptions apply. Accordingly, if the Publicly-Offered Security
Exception applies to the Preferred Securities, the underlying assets of the
Issuer will not be considered to be plan assets and the activities of the Issuer
will not, in general, be subject to the restrictions of ERISA or the Code. The
Publicly-Offered Security Exception applies if the equity interest is (1)
"freely transferable," (2) part of a class of securities that is "widely held"
(i.e., held by 100 or more investors independent of the issuer and of each
other) and (3) either (a) part of a class of securities registered under Section
12(b) or 12(g) of the Securities Exchange Act of 1934, or (b) sold to the Plan
as part of a public offering pursuant to an effective registration statement
under the Securities Act of 1933 and the class of which such equity interest is
a part is timely registered under the Securities Exchange Act of 1934. It is
expected that the Preferred Securities will qualify for the Publicly-Offered
Security Exception because the Preferred Securities may be transferred at any
time, will be registered as described above and, although the Issuer will not
know the identity or number of investors holding Preferred Securities, it is
expected, and the Issuer has no reason to believe otherwise, that the Preferred
Securities will be owned by at least 100 independent investors.

Nevertheless, even if the underlying assets of the Issuer are not plan
assets, because of the activities of ALH or the activities of its affiliates,
ALH may be deemed to be a Party-in-Interest or Disqualified Person with respect
to certain Plans. In addition, (i) the net proceeds of the issuance of the
Preferred Securities will be used by the Issuer to purchase the Junior
Subordinated Debentures from ALH and (ii) ALH will agree to pay the Guarantee
Payments to the holders of the Preferred Securities. If the Preferred Securities
are acquired and held by a Plan with respect to which ALH is a Party-in-Interest
or Disqualified Person, such acquisition and holding could be deemed to be a
direct or indirect Prohibited Transaction. Such transactions may, however, be
exempt from the penalties otherwise applicable to such transactions by reason of
the existence of one or more statutory or administrative exemptions such as
those described below. If the conditions of one or more of these exemptions (or
some other applicable exemption) are met, then the acquisition and holding of
the Preferred Securities by or on behalf of a Plan with respect to which ALH is
a Party-in-Interest or Disqualified Person should be exempt from the penalties
applicable to a Prohibited Transaction under ERISA and the Code. Such
administrative exemptions may apply with respect to Plan assets held, managed
and/or invested by, inter alia, certain bank collective investment funds,
insurance company pooled separate accounts and qualified professional asset
managers, as set forth in a series of administrative exemptions (Prohibited
Transaction Exemption ("PTE") 91-38, 56 FR 31966, June 12, 1991, PTE 90-1, 55 FR
2891, January 29, 1990, and PTE 84-14, 49 FR 22157, May 25, 1984, respectively).
If the conditions of one or more of these exemptions (or some other applicable
exemption) are met, then the acquisition and holding of the Preferred Securities
by or on behalf of a Plan should be exempt from certain of the prohibited
transactions provisions of ERISA and the Code. It should be noted, however, that
even if the conditions specified in one or more of these exemptions are met, the
scope of relief provided by such exemptions may not necessarily cover all acts
that might be construed as prohibited transactions under ERISA and the Code.

Prior to making an investment in the Preferred Securities, a Plan investor
must determine whether ALH is a Party-in-Interest or Disqualified Person with
respect to such Plan and, if so, whether such transaction is subject to one or
more statutory or administrative exemptions, including those described above.

Prior to making an investment in the Preferred Securities, prospective
investors should consult with their legal advisors concerning the impact of
ERISA and the Code and the potential consequences of such investment with
respect to their specific circumstances.

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OWNERSHIP OF COMMON STOCK

OWNERSHIP OF CLASS A COMMON STOCK

Immediately prior to the Common Stock 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 Common Stock 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 ALH's Articles of Incorporation, no shares of
Class B Common Stock may be owned by any person other than 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 have subscribed for Shares in the
Subscription Offering in their capacities as eligible policyowners of AmerUs
Life. 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
eligible policyowners. Directors and executive officers of the Company, as a
group, subscribed for Shares in the Subscription Offering.

133
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, ALH,
AmerUs Life and the Issuer have agreed that the Issuer will sell to each of the
Underwriters named below, and each of such Underwriters, for whom Goldman, Sachs
& Co. are acting as representatives, has severally agreed to purchase from the
Issuer, the respective number of Preferred Securities set forth opposite its
name below:

<TABLE>
<CAPTION>
NUMBER OF
PREFERRED
UNDERWRITER SECURITIES
- --------------------------------------------------------------------------------- -----------
<S> <C>
Goldman, Sachs & Co..............................................................

-----------
Total........................................................................ 3,000,000
-----------
-----------
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all the Preferred Securities
offered hereby, if any are taken.

The Underwriters propose to offer the Preferred Securities in part directly
to the public at the initial public offering price set forth on the cover page
of this Prospectus and in part to certain securities dealers at such price less
a concession of $ per Preferred Security. The Underwriters may allow, and
such dealers may reallow, a concession not in excess of $ per Preferred
Security to certain brokers and dealers. After the Preferred Securities are
released for sale to the public, the offering price and other selling terms may
from time to time be varied by the representatives.

In view of the fact that the proceeds from the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures issued by
ALH, the Underwriting Agreement provides that ALH will pay as Underwriters'
Compensation for the Underwriters' arranging the investment therein of such
proceeds an amount of $ per Preferred Security for the accounts of the
several Underwriters.

The Issuer has granted the Underwriters an option exercisable for 30 days
after the date of this Prospectus to purchase up to an aggregate of 450,000
additional Preferred Securities solely to cover over-allotments, if any. If the
Underwriters exercise their over-allotment option, the Underwriters have
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of Preferred Securities to be purchased
by each of them, as shown in the foregoing table, bears to the 3,000,000
Preferred Securities offered hereby.

ALH and the Issuer have agreed that, during the period beginning from the
date of this Prospectus and continuing to and including the earlier of (i) the
termination of trading restrictions on the Preferred Securities, as determined
by the Underwriters, or (ii) 30 days after the closing date, they will not
offer, sell, contract to sell, or otherwise dispose of any Preferred Securities,
any other interests of the Issuer, or any preferred stock or any other
securities of the Issuer or ALH which are substantially similar to the Preferred
Securities, including but not limited to any guarantee of such security, or any
securities convertible into or exchangeable for or representing the right to
receive, Preferred Securities, preferred stock or such substantially similar
securities of either the Issuer or ALH, without the prior written consent of
Goldman, Sachs & Co., except for the Preferred Securities offered in connection
with this Preferred Offering, the Common Securities and the Guarantee.

Goldman, Sachs & Co. have from time to time performed investment banking
services for the Company and have received fees in connection with such
services. Goldman, Sachs & Co. served as one of the representatives of the
Underwriters for the Public Offering.

Prior to this Preferred Offering, there has been no public market for the
Preferred Securities. Application will be made to list the Preferred Securities
on the NYSE under the symbol . In order

134
<PAGE>

to meet one of the requirements for listing the Preferred Securities on the
NYSE, the underwriters will undertake to sell lots of 100 or more Preferred
Securities to a minimum of 400 beneficial holders. Trading of the Preferred
Securities on the NYSE is expected to commence within a thirty-day period after
the initial delivery of the Preferred Securities. The representatives of the
Underwriters have advised ALH that they intend to make a market in the Preferred
Securities prior to commencement of trading on the NYSE, but are not obligated
to do so and may discontinue market-making at any time without notice. No
assurance can be given as to the liquidity of the trading market for the
Preferred Securities.

The Issuer, ALH and AmerUs Life have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act.

VALIDITY OF SECURITIES

Certain matters of Delaware law relating to the validity of the Preferred
Securities, the enforceability of the Trust Agreement and the formation of the
Issuer will be passed upon by Richards, Layton & Finger, special Delaware
Counsel to ALH and the Issuer. The validity of the Guarantee and the Junior
Subordinated Debentures will be passed upon for ALH by Sidley & Austin, and for
the Underwriters by Sullivan & Cromwell, New York, New York. Sidley & Austin and
Sullivan & Cromwell will rely on the opinion of Richards, Layton & Finger as to
matters of Delaware law and upon the opinion of James A. Smallenberger, Esq.,
Senior Vice President and Secretary of ALH, as to matters of Iowa law. Certain
matters relating to the United States federal income tax considerations will be
passed upon for ALH by Sidley & Austin.

EXPERTS

The Consolidated Financial Statements and Schedules of the Company as of
September 30, 1996, December 31, 1995 and December 31, 1994 and for the nine
month period ended September 30, 1996 and 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.

135
<PAGE>
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>

136
<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>

137
<PAGE>
<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>

138
<PAGE>
<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>

139
<PAGE>
<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>

140
<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>

141
<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.
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
B+, B and B- Vulnerable
CCC Extremely vulnerable
R Regulatory actions
BBBq, Bbq and Bq Qualified solvency
ratings
</TABLE>

142
<PAGE>

<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 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
</TABLE>

143
<PAGE>
<TABLE>
<S> <C>
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>

144
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Independent Auditors' Report............................................................................... F-2
Consolidated Balance Sheets as of September 30, 1996 and December 31, 1995 and 1994........................ F-3
Consolidated Income Statements for the nine months ended September 30, 1996 and September 30, 1995
(unaudited) and the years ended December 31, 1995, 1994 and 1993.......................................... F-4
Consolidated Statements of Stockholder's Equity for the nine months ended September 30, 1996 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 September 30, 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>

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 September 30, 1996, December 31, 1995 and
December 31, 1994, and the related consolidated statements of income,
stockholder's equity, and cash flows for the nine month period ended September
30, 1996, and 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 September 30, 1996, December 31, 1995, and
December 31, 1994, and the results of their operations and their cash flows for
the nine month period ended September 30, 1996, and 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

KPMG Peat Marwick LLP

December 2, 1996, except as to note 1,
which is as of December 11, 1996

F-2
<PAGE>

AMERUS LIFE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, ----------------------
1996 1995 1994
SEPTEMBER 30, --------------- ---------- ----------
1996
PRO FORMA
AS ADJUSTED
FOR THE
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.............................. $2,294,031 $ 2,297,571 $3,142,096 $2,566,768
Equity securities...................................... 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.............................................. 10,481 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
-------------- --------------- ---------- ----------
Total investments.................................... 2,766,712 2,810,210 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 (note 6)............................. 4,369 4,369 -- --
Property and equipment (less accumulated depreciation
1996-- $22,416; 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 assets........................................ 1,237,139 1,237,139 -- --
-------------- --------------- ---------- ----------
Total assets......................................... $4,239,591 $ 4,291,813 $4,371,946 $4,036,951
-------------- --------------- ---------- ----------
-------------- --------------- ---------- ----------

LIABILITIES AND STOCKHOLDER'S 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.................. 43,811 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..................................... 34,077 34,077 18,760 15,462
Deferred income taxes (note 6)........................... -- -- 48,623 1,482
Other liabilities........................................ 60,095 60,095 78,939 51,213
Debt (note 5)............................................ 36,333 45,055 36,461 37,957
Closed block liabilities................................. 1,501,269 1,501,269 -- --
-------------- --------------- ---------- ----------
Total liabilities.................................... 3,806,197 3,779,419 3,832,037 3,618,628
-------------- --------------- ---------- ----------
Stockholder's equity (note 11):
Preferred stock, no par value, 20,000,000 shares
authorized,
none issued............................................. -- -- -- --
Common stock, Class A, no par value, 75,000,000 shares
authorized; 14,500,000 shares issued and outstanding.... 14,500 14,500 -- --
Common stock, Class B, no par value, 50,000,000 shares
authorized; 5,000,000 shares issued and outstanding..... 5,000 5,000 -- --
Unrealized appreciation of available-for-sale securities
(note 2)................................................ 22,718 22,718 108,714 15,320
Retained earnings........................................ 391,176 470,176 431,195 403,003
-------------- --------------- ---------- ----------
Total stockholder's equity........................... 433,394 512,394 539,909 418,323
-------------- --------------- ---------- ----------
Commitments and contingencies (note 10)
Total liabilities and stockholder's equity........... $4,239,591 $ 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>
NINE MONTHS ENDED SEPTEMBER
30, YEARS ENDED DECEMBER 31,
---------------------------- ----------------------------------------
1996 1995 1994 1993
-------------- 1995 -------------- ----------- -----------
------------
(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............................... 46,892 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
-------------- ------------ -------------- ----------- -----------
328,029 396,891 532,928 526,295 515,870
-------------- ------------ -------------- ----------- -----------
Income before income taxes and
cumulative effect of change in
accounting principles.............. 101,597 83,874 110,550 26,131 55,775
Income tax expense (note 6)............. 38,653 29,866 41,202 19,464 21,352
-------------- ------------ -------------- ----------- -----------
Income before cumulative effect of
change in accounting principle......... 62,944 54,008 69,348 6,667 34,423

Cumulative effect of change in
accounting principle, net of tax (note
7)..................................... -- -- -- -- (3,214)
-------------- ------------ -------------- ----------- -----------
Net income.......................... $ 62,944 $ 54,008 $ 69,348 $ 6,667 $ 31,209
-------------- ------------ -------------- ----------- -----------
-------------- ------------ -------------- ----------- -----------
Pro forma net income per common share
(note 15)............................ $ 2.86 $ 3.15
-------------- ------------ -------------- ----------- -----------
-------------- ------------ -------------- ----------- -----------
Weighted average Common Shares
outstanding.......................... 22,000,000 22,000,000
-------------- ------------ -------------- ----------- -----------
-------------- ------------ -------------- ----------- -----------
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>

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

<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
(DEPRECIATION)
OF AVAILABLE-
COMMON STOCK FOR-SALE TOTAL
-------------------- SECURITIES RETAINED STOCKHOLDER'S
CLASS A CLASS B (NOTE 2) EARNINGS EQUITY
--------- --------- -------------- ----------- --------------
<S> <C> <C> <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....................................... -- -- -- 62,944 62,944
Net unrealized depreciation...................... -- -- (85,996) -- (85,996)
Dividend to American Mutual Holding
Company (note 11)............................... -- -- -- (4,463) (4,463)
Issuance of common stock......................... 14,500 5,000 -- (19,500) --
--------- --------- -------------- ----------- --------------
Balance at September 30, 1996.................... $ 14,500 $ 5,000 $ 22,718 $ 470,176 $ 512,394
--------- --------- -------------- ----------- --------------
--------- --------- -------------- ----------- --------------
</TABLE>

See accompanying notes to consolidated financial statements.

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

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------------- -------------------------------
1996 1995 1994 1993
------------ 1995 --------- --------- ---------
------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................................... $ 62,944 $ 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..................... (62,555) (41,564) (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............................................ 15,317 14,130 3,298 6,727 (14,619)
Deferred........................................... (6,747) (14,856) (3,105) 2,602 (10,034)
Other, net............................................. (16,412) 9,106 22,437 (7,057) 3,366
------------ ------------ --------- --------- ---------
Net cash provided by operating activities.............. 85,326 128,438 202,022 172,350 173,645
------------ ------------ --------- --------- ---------
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........................................ 23,431 36,133 44,855 45,150 25,974
------------ ------------ --------- --------- ---------
Net cash provided by (used in) investing activities.... 5,847 (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 debt, 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 period................................ 4,620 23,382 23,382 10,705 14,668
------------ ------------ --------- --------- ---------
Cash at end of period...................................... $ -- $ 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
------------ ------------ --------- --------- ---------
------------ ------------ --------- --------- ---------
Supplemental disclosure of non-cash investing and financing
activities:
Issuance of Class A and Class B Common Stock related to
the Reorganization as a reclassification of retained
earnings................................................ $ 19,500 $ -- $ -- $ -- $ --
------------ ------------ --------- --------- ---------
------------ ------------ --------- --------- ---------
</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 $1,781,000, $10,539,000, ($101,000), and $6,055,000 in the
nine months ended September 30, 1996 and the years ended December 31, 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 indirectly owns, through AmerUs
Group, 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, directly or
indirectly, by AMHC, which must have a majority of the

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

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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. Each share of
Class A and Class B Common Stock entitles its holder to one vote per share;
however, the voting rights are adjusted if the number of Class A shares exceed
the number of Class B shares such that the holders of Class B shares will always
have a majority of the votes. In addition, as long as the members of AMHC own
directly or indirectly at least 50.1 percent of the voting power of the
outstanding voting stock, AMHC is entitled to equity purchase rights which
provide for the Company to notify AMHC in writing of a proposed sale of voting
stock or any options, warrants, or rights to acquire voting stock. AMHC has the
right to purchase the same proportionate number of shares being offered for sale
as AMHC owns of the total shares at the time of the registration.

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 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.

CLOSED BLOCK

The Reorganization contained an arrangement, known as a closed block (the
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.

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, and from July 1, 1996 to September 30, 1996, is as follows (IN THOUSANDS):

<TABLE>
<CAPTION>
CLOSED BLOCK
-------------
<S> <C>
ASSETS:
Fixed maturity securities, at fair value (amortized cost of $839,212).............................. $ 843,809
Equity securities, at fair value................................................................... 15,488
Short-term investments, at fair value.............................................................. 718
Mortgage loans on real estate...................................................................... --
Real estate........................................................................................ --
Policy loans....................................................................................... 165,263
Other investments.................................................................................. --
Accrued investment income.......................................................................... 8,357
Premiums and fees receivable....................................................................... --
Reinsurance receivables............................................................................
Deferred policy acquisition costs.................................................................. 196,146
Deferred income taxes.............................................................................. --
Property and equipment............................................................................. --
Other assets....................................................................................... 7,358
-------------
$ 1,237,139
-------------
-------------
LIABILITIES:
Future life and annuity policy benefits............................................................ $ 1,339,695
Policyowner funds.................................................................................. 24,617
Checks drawn in excess of bank balances............................................................ --
Accrued expenses................................................................................... --
Dividends payable to policyowners.................................................................. 131,906
Policy and contract claims......................................................................... 5,051
Income taxes payable............................................................................... --
Other liabilities.................................................................................. --
Debt............................................................................................... --
-------------
$ 1,501,269
-------------
-------------
REVENUES AND EXPENSES:
Insurance premiums................................................................................. $ 48,747
Universal life and annuity product charges......................................................... 4,657
Net investment income.............................................................................. 26,826
Realized gains on investments...................................................................... 70
Other revenues..................................................................................... --
Policyowner benefits............................................................................... (51,028)
Underwriting, acquisition, and insurance expenses.................................................. (1,038)
Amortization of deferred policy acquisition costs.................................................. (11,244)
Dividends to policyowners.......................................................................... (14,331)
-------------
Income before income taxes..................................................................... $ 2,659(1)
-------------
-------------
</TABLE>

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

(1) Represents contribution from the Closed Block

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

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 for the nine-month period ended
September 30, 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.

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
stockholder's equity. These unrealized gains or losses in stockholder's 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 the fair value of
underlying collateral. 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-10
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INTEREST RATE SWAPS, CAPS AND SWAPTIONS

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

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

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

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

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 expected lives of the contracts. Amounts received as
payments for universal life insurance policies and for annuity products
(including deferred annuities and annuities without life contingencies) are not
recorded as premium revenue. Revenues for such contracts consist of policy

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

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

FUTURE POLICY BENEFITS

The liability for future policy benefits for traditional life insurance is
computed using the net level method, utilizing the guaranteed interest and
mortality rates used in calculating cash surrender values as described in the
contracts. Reserve interest assumptions range from 2.00 percent to 7.25 percent.
The weighted average assumed interest rate for all traditional life policy
reserves was 4.20 percent in 1996 and 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 6.31 precent in 1996, 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 5.39 percent in 1996,
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 September 30, 1996, 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.

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

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 to compute the Company's
provision for federal income taxes. Deferred income tax assets and liabilities
are determined based on differences among the financial reporting and tax bases
of assets and liabilities and are measured using the enacted tax rates and laws.

EMERGING ACCOUNTING MATTER

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 stockholder's
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-13
<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
September 30, 1996:
Fixed maturity securities:
Corporate bonds.................. $ 1,378,609 $ 47,669 $ 10,852 $ 1,415,426
U.S. government bonds............ 51,861 597 244 52,214
Foreign government bonds......... 20,147 1,272 64 21,355
Mortgage-backed bonds............ 794,870 17,654 3,948 808,576
------------- ----------- ----------- -------------
$ 2,245,487 $ 67,192 $ 15,108 $ 2,297,571
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
Equity securities.................. $ 70,691 $ 4,800 $ 916 $ 74,575
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
Short-term investments............. $ 12,002 $ -- $ -- $ 12,002
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
</TABLE>

<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
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
</TABLE>

F-14
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(2) INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------- ----------- ----------- -------------
(IN THOUSANDS)
Available-for-sale securities at
December 31, 1994:
<S> <C> <C> <C> <C>
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 September 30, 1996, 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................................................... $ 10,775 $ 10,796
Due in 1997 - 2001............................................ 353,409 366,059
Due in 2002 - 2006............................................ 705,786 724,845
Due after 2006................................................ 380,647 387,295
Mortgage-backed securities...................................... 794,870 808,576
------------- -------------
$ 2,245,487 $ 2,297,571
------------- -------------
------------- -------------
</TABLE>

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

The ratings of the Company's fixed maturity securities at September 30,
1996, using Standard & Poor's rating service, are summarized as follows (in
thousands):

<TABLE>
<CAPTION>
Treasuries and AAA............................................. $ 824,245
<S> <C>
AA............................................................. 97,548
A.............................................................. 518,222
BBB............................................................ 654,848
BB............................................................. 155,344
Less than BB................................................... 47,364
----------
$2,297,571
----------
----------
</TABLE>

The Company's investment in non-income producing fixed maturity securities
and real estate was $7.8 million as of September 30, 1996.

F-15
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(2) INVESTMENTS (CONTINUED)
Major categories of investment income are summarized as follows:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
-------------- ----------------------------------------
1996 1995 1994 1993
-------------- ----------- ----------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Fixed maturity securities......... $ 162,038 $ 231,208 $ 206,346 $ 201,203
Equity securities................. 3,664 6,311 7,821 5,834
Mortgage loans on real estate..... 16,902 33,738 55,181 57,031
Real estate....................... 5,657 9,729 9,907 6,708
Policy loans...................... 7,639 14,043 12,745 12,572
Other............................. 3,056 5,211 2,329 722
-------------- ----------- ----------- --------------
Gross investment income....... 198,956 300,240 294,329 284,070
Investment expenses............... 9,663 14,996 18,638 14,216
-------------- ----------- ----------- --------------
Net investment income......... $ 189,293 $ 285,244 $ 275,691 $ 269,854
-------------- ----------- ----------- --------------
-------------- ----------- ----------- --------------
</TABLE>

Investment expenses include depreciation on real estate of $1.8 million,
$2.9 million, $2.0 million and $2.0 million in the nine months ended September
30, 1996, and the years ended December 31, 1995, 1994, and 1993, respectively.

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

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEARS ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------
1996 1995 1994 1993
-------------- --------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities:
Gross realized gains................. $ 14,995 $ 18,652 $ 10,879 $ 18,679
Gross realized losses................ (11,182) (9,240) (36,423) (6,809)
Equity securities:
Gross realized gains................. 55,119 45,419 14,746 10,095
Gross realized losses................ (121) (3,634) (5,181) (2,887)
Other investments........................ 1,249 812 (2,744) (642)
Net provision for losses--mortgage loans
on real estate.......................... 2,495 (622) (1,207) (2,976)
-------------- --------- ---------- ---------
$ 62,555 $ 51,387 $ (19,930) $ 15,460
-------------- --------- ---------- ---------
-------------- --------- ---------- ---------
</TABLE>

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

F-16
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(2) INVESTMENTS (CONTINUED)
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>
SEPTEMBER 30, DECEMBER 31,
-------------- ------------------------------------
1996 1995 1994 1993
-------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Unrealized appreciation
(depreciation):
Fixed maturity securities........... $ 52,084 $ 190,847 $ (97,217) $ 153,744
Equity securities................... 3,884 56,806 65,778 87,247
Short-term investments.............. -- 77 -- --
Other investments................... 3,103 6,335 (2,277) 211
Closed Block investments............ 5,085 -- -- --
Deferred policy acquisition costs..... (30,371) (88,039) 56,102 (81,492)
Deferred income taxes................. (11,067) (57,312) (7,066) (55,129)
-------------- ----------- ---------- -----------
$ 22,718 $ 108,714 $ 15,320 $ 104,581
-------------- ----------- ---------- -----------
-------------- ----------- ---------- -----------
</TABLE>

The change in unrealized appreciation (depreciation) on fixed maturity
securities was ($139) million, $288 million, ($251) million, and $154 million in
the nine months ended September 30, 1996, and for the years ended December 31,
1995, 1994 and 1993, respectively; the corresponding amounts for equity
securities were ($53) million, ($9) million, ($21) million, and $11 million.

At September 30, 1996, December 31, 1995 and December 31, 1994, investments
in fixed maturity securities with a carrying amount of $2.4 million, $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
stockholder's equity at September 30, 1996.

(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>
SEPTEMBER 30, DECEMBER 31,
-------------- --------------------------
1996 1995 1994
-------------- ------------ ------------
<S> <C> <C> <C>
Commercial loans:
Beginning balance................................ $ 379,414 $ 504,034 $ 723,602
Additions........................................ 19,649 39,933 75,275
Payments and miscellaneous charges............... (75,090) (146,496) (280,871)
Sales............................................ (47,234) -- --
Foreclosed properties............................ (6,174) (18,057) (13,972)
-------------- ------------ ------------
Ending balance................................... 270,565 379,414 504,034
Residential and other mortgage loans............. 3,258 4,250 9,178
Valuation allowance.............................. (13,590) (30,067) (65,549)
-------------- ------------ ------------
Total mortgage loans......................... $ 260,233 $ 353,597 $ 447,663
-------------- ------------ ------------
-------------- ------------ ------------
</TABLE>

F-17
<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>
SEPTEMBER 30,
------------------------
1996 1995 DECEMBER 31, 1994
------------------------ ------------------------ ------------------------
--------------------------------------------------
NUMBER AMOUNT NUMBER AMOUNT NUMBER AMOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Commercial:
California........... 22 $ 44,456 31 $ 69,946 42 $ 90,482
Florida.............. 4 15,429 6 21,964 9 28,677
Iowa................. 50 84,069 56 95,837 66 108,944
Kansas............... 11 21,211 14 29,249 16 39,643
Texas................ 7 21,651 9 28,053 14 59,233
Washington........... 4 10,762 8 15,172 10 28,949
Other................ 60 73,011 88 119,193 109 148,106
Residential............ 73 3,234 95 4,250 196 9,178
Valuation allowance.... -- (13,590) -- (30,067) -- (65,549)
--- ----------- --- ----------- --- -----------
231 260,233 307 $ 353,597 462 $ 447,663
--- ----------- --- ----------- --- -----------
--- ----------- --- ----------- --- -----------
</TABLE>

At September 30, 1996, the Company's investment in mortgage loans included
$33.1 million in loans that are considered to be impaired, for which the related
allowance for credit losses is $3.2 million. The average recorded investment in
impaired loans during the nine months ended September 30, 1996, was $55.3
million. For the nine months ended September 30, 1996, the Company recorded $3.9
million in interest income on those impaired loans.

No mortgage loan on any one individual property exceeded $14 million at
September 30, 1996.

Provisions for losses are summarized as follows:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
-------------- ---------------------------------
1996 1995 1994 1993
-------------- ---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance at beginning of period.......... $ 30,067 $ 65,549 $ 80,220 $ 81,040
-------------- ---------- ---------- ---------
Provisions for losses - mortgage
loans.................................. (2,495) 622 1,207 2,976
Provision on mortgages sold/ transferred
to real estate......................... (13,982) (36,104) (15,878) (3,796)
-------------- ---------- ---------- ---------
Net decrease for period............... (16,477) (35,482) (14,671) (820)
-------------- ---------- ---------- ---------
Balance at end of period................ $ 13,590 $ 30,067 $ 65,549 $ 80,220
-------------- ---------- ---------- ---------
-------------- ---------- ---------- ---------
</TABLE>

F-18
<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>
SEPTEMBER 30, 1996
----------------------------------------- YEARS ENDED DECEMBER 31,
NON-CLOSED CLOSED -------------------------------------
BLOCK BLOCK TOTAL 1995 1994 1993
------------ ----------- -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of
period....................... $ 162,103 $ 193,647 $ 355,750 $ 348,259 $ 336,577 $ 335,318
Policy acquisition costs
deferred..................... 23,679 13,743 37,422 57,730 54,438 48,700
Policy acquisition costs
amortized.................... (31,865) (11,244) (43,109) (50,239) (42,756) (47,441)
------------ ----------- -------------- ----------- ----------- -----------
153,917 196,146 350,063 355,750 348,259 336,577
Unrealized (gain) loss on
available-for-sale
securities................... (30,371) -- (30,371) (88,039) 56,102 (81,492)
------------ ----------- -------------- ----------- ----------- -----------
Balance at end of period...... $ 123,546 $ 196,146 $ 319,692 $ 267,711 $ 404,361 $ 255,085
------------ ----------- -------------- ----------- ----------- -----------
------------ ----------- -------------- ----------- ----------- -----------
</TABLE>

The components of the deferred policy acquisition costs are as follows (in
thousands):

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
----------------------------------------- DECEMBER 31,
NON-CLOSED CLOSED -------------------------------------
BLOCK BLOCK TOTAL 1995 1994 1993
------------ ----------- -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Universal life insurance and
annuity products............. $ 150,989 $ 45,329 $ 196,318 $ 203,949 $ 197,256 $ 199,175
Participating traditional life
insurance.................... 2,276 131,235 133,511 131,602 131,500 119,487
Non-participating traditional
life insurance............... 652 19,582 20,234 20,199 19,503 17,915
------------ ----------- -------------- ----------- ----------- -----------
$ 153,917 $ 196,146 $ 350,063 $ 355,750 $ 348,259 $ 336,577
Unrealized (gain) loss on
available-for-sale
securities................... (30,371) -- (30,371) (88,039) 56,102 (81,492)
------------ ----------- -------------- ----------- ----------- -----------
$ 123,546 $ 196,146 $ 319,692 $ 267,711 $ 404,361 $ 255,085
------------ ----------- -------------- ----------- ----------- -----------
------------ ----------- -------------- ----------- ----------- -----------
</TABLE>

Commissions represent approximately 85 percent of policy acquisition costs
deferred.

F-19
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(5) DEBT

Debt consists of the following (in thousands):

<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
-------------- --------------------
1996 1995 1994
-------------- --------- ---------
<S> <C> <C> <C>
Line of credit with Federal Home Loan Bank - interest is paid at
a rate of 6.29% at September 30, 1996. The agreement provides
for maximum borrowings of $25,000,000. The Company has assigned
all Federal Home Loan Bank stock and has assigned other
securities as collateral on the line of credit................. $ 24,700 $ -- $ 3,665
The Iowa Housing Finance Authority variable rate (3.85% at
September 30, 1996) demand Multi-Family Housing Bond Series
1985-A......................................................... 8,722 8,813 8,948
Federal Home Loan Bank community investment long-term advances
with a weighted average interest rate of 6.53% at September 30,
1996 maturing at various dates through July 2010............... 11,633 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
-------------- --------- ---------
$ 45,055 $ 36,461 $ 37,957
-------------- --------- ---------
-------------- --------- ---------
</TABLE>

Maturities of long-term debt are as follows for each of the five years
ending September 30:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Year ending September 30:
1997.......................................................................... $ 33,658
1998.......................................................................... 203
1999.......................................................................... 218
2000.......................................................................... 233
2001.......................................................................... 249
Thereafter.................................................................... 10,494
--------------
$ 45,055
--------------
--------------
</TABLE>

At September 30, 1996, 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 $49.7 million. The bonds are collateralized by certain mortgage
loans held by the Company with a carrying value of $8.7 million at September 30,
1996.

Interest paid totaled $1.2 million, $2.4 million, $5.4 million and $7.0
million in the nine months ended September 30, 1996, and the years ended
December 31, 1995, 1994, and 1993, respectively.

F-20
<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>
NINE MONTHS
ENDED YEARS ENDED DECEMBER 31,
SEPTEMBER 30, -------------------------------
1996 1995 1994 1993
-------------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Income tax expense on:
Operations........................................ $ 38,653 $ 41,202 $ 19,464 $ 21,352
Unrealized holding gains (losses) on
available-for-sale securities.................... (46,245) 50,246 48,063 (28,975)
Accounting change for postretirement benefits..... -- -- -- (1,731)
-------------- --------- --------- ---------
$ (7,592) $ 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>
NINE MONTHS YEARS ENDED DECEMBER 31,
ENDED SEPTEMBER -------------------------------------
30, 1996 1995 1994 1993
--------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Corporate federal income tax rate..................... 35.00% 35.00% 35.00% 35.00%
Differential earnings amount.......................... 4.44 -- 36.68 --
Tax-exempt investment income.......................... (.14) (.24) (1.66) (.59)
Cumulative effect of tax rate change.................. -- -- -- 1.57
Merger expenses....................................... .42 .48 2.29 --
Other items, net...................................... (1.67) 2.03 2.18 2.30
----- ----- ----- -----
Effective tax rate................................ 38.05% 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>
NINE MONTHS
ENDED YEARS ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------
1996 1995 1994 1993
-------------- --------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Current............................................ $ 45,401 $ 44,307 $ 16,862 $ 31,386
Deferred........................................... (6,748) (3,105) 2,602 (10,034)
-------------- --------- --------- ----------
Total federal income tax expense............... $ 38,653 $ 41,202 $ 19,464 $ 21,352
-------------- --------- --------- ----------
-------------- --------- --------- ----------
</TABLE>

F-21
<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>
DECEMBER 31,
SEPTEMBER 30, --------------------------
1996 1995 1994
-------------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred income tax assets:
Policy reserves and policyholder funds................... $ 99,401 $ 106,813 $ 101,509
Policy acquisition costs capitalized for tax............. 29,985 26,588 21,208
Net unrealized depreciation on available-for-sale
securities.............................................. -- -- 11,801
Deferred policy acquisition costs related to unrealized
appreciation............................................ 10,630 30,813 --
Deferred compensation.................................... 10,289 10,134 7,109
Other.................................................... 21,332 23,344 31,422
-------------- ------------ ------------
Total gross deferred income tax assets................. 171,637 197,692 173,049
-------------- ------------ ------------
Deferred income tax liabilities:
Deferred policy acquisition costs........................ (122,522) (124,513) (121,891)
Net unrealized appreciation on available-for-sale
securities.............................................. (22,455) (88,922) --
Deferred policy acquisition costs related to unrealized
depreciation............................................ -- -- (19,636)
Reinsurance receivable................................... (14,894) (23,403) (22,838)
Other.................................................... (7,397) (9,477) (10,166)
-------------- ------------ ------------
Total gross deferred tax liability..................... (167,268) (246,315) (174,531)
-------------- ------------ ------------
Net deferred income tax asset (liability).............. $ 4,369 $ (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 deferred tax assets, 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 $42.0 million, $51.9 million, $14.6
million, and $45.2 million in the nine months ended September 30, 1996, and the
years ended December 31, 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. 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 Company has frozen the
defined benefit pension plans effective December 31, 1995, and has recognized
its portion of a curtailment gain amounting to $6.2 million, or $3.1 million
after federal excise taxes, as other revenues in 1995.

F-22
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(7) DEFINED BENEFIT PENSION PLANS (CONTINUED)

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. The following information presents
the plans' funded status and pension cost as of September 30, 1996, December 31,
1995 (prior to revaluation for curtailment of the plans) and December 31, 1994:

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, ----------------------
1996 1995 1994
-------------- ---------- ----------
<S> <C> <C> <C>
(IN THOUSANDS)
Actuarial present value of accumulated benefit obligation,
including vested benefits of $44,144, $44,144 and $32,141 in
1996, 1995 and 1994, respectively............................ $ (44,144) $ (45,505) $ (38,750)
-------------- ---------- ----------
-------------- ---------- ----------
Projected benefit obligation for service rendered to
date--includes effect of increase in compensation levels..... $ (44,144) $ (45,505) $ (45,697)
Plans' assets at fair value, primarily consisting of mutual
funds and certificates of deposit............................ 54,882 52,592 47,017
-------------- ---------- ----------
Plans' assets in excess of projected benefit obligations...... 10,738 7,087 1,320
Unrecognized (gain) loss from actual experience difference
from assumed and effects of changes in assumptions........... (4,024) (2,745) 376
Unrecognized prior service cost............................... (222) -- (1,473)
Net unrecognized transition asset............................. (965) -- 54
-------------- ---------- ----------
Prepaid pension cost.......................................... $ 5,527 $ 4,342 $ 277
-------------- ---------- ----------
-------------- ---------- ----------
Weighted average discount rate................................ 7.25% 7.25% 8.00%
-------------- ---------- ----------
-------------- ---------- ----------
Rate of increase in future compensation levels................ n/a 5.50% 5.00%
-------------- ---------- ----------
-------------- ---------- ----------
Expected long-term rate of return on assets................... 8.00% 8.00% 7.50%
-------------- ---------- ----------
-------------- ---------- ----------
</TABLE>

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEARS ENDED DECEMBER 31,
SEPTEMBER 30, -------------------------------
1996 1995 1994 1993
-------------- --------- --------- ---------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Service cost--benefits earned during year............ $ -- $ 1,768 $ 2,325 $ 2,058
Interest cost on projected benefit obligation........ 3,101 3,609 3,282 3,155
Actual return on plan assets......................... (4,281) (3,729) (3,632) (3,769)
Net amortization and deferral........................ (90) (114) (37) 391
Special termination benefits due to early
retirement.......................................... -- -- 1,597 993
------- --------- --------- ---------
Defined benefit pension cost (benefit)........... $ (1,270) $ 1,534 $ 3,535 $ 2,828
------- --------- --------- ---------
------- --------- --------- ---------
Company's portion of net pension cost (benefit)...... $ (954) $ 696 $ 2,578 $ 1,267
------- --------- --------- ---------
------- --------- --------- ---------
</TABLE>

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
$1.0 million, respectively.

F-23
<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 $0.6 million, $0.4 million, $0.6 million, and $0.7 million in the
nine months ended September 30, 1996, and 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 September 30, 1996, December 31,
1995, and December 31, 1994, amounting to $15.4 million, $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:

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, --------------------
1996 1995 1994
-------------- --------- ---------
<S> <C> <C> <C>
(IN THOUSANDS)
Accumulated postretirement benefit obligation:
Fully eligible active plan participants.......................... $ 763 $ 491 $ 425
Other active plan participants................................... 1,641 1,716 1,724
Retirees......................................................... 5,745 6,121 5,481
------- --------- ---------
Accumulated postretirement benefit obligation...................... 8,149 8,328 7,630
Unrecognized prior service cost.................................... (1,072) (27) --
Unrecognized (loss) gain........................................... 1,057 (167) 124
------- --------- ---------
Accrued postretirement benefit cost................................ $ 8,134 $ 8,134 $ 7,754
------- --------- ---------
------- --------- ---------
</TABLE>

F-24
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(7) DEFINED BENEFIT PENSION PLANS (CONTINUED)

Net periodic postretirement benefit expense included the following
components:

<TABLE>
<CAPTION>
NINE MONTHS YEARS ENDED
ENDED DECEMBER 31,
SEPTEMBER 30, --------------------
1996 1995 1994 1993
--------------- --------- --------- ---------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Service cost................................................ $ 409 $ 248 $ 268 $ 153
Interest cost............................................... 572 586 521 373
Net amortization and deferral............................... 57 5 19 --
Curtailment and special termination benefits................ -- -- -- 613
------- --------- --------- ---------
Net periodic postretirement benefit expense............. $ 1,038 $ 839 $ 808 $ 1,139
------- --------- --------- ---------
------- --------- --------- ---------
Company's portion of net periodic postretirement benefit
expense.................................................... $ 612 $ 639 $ 426 $ 727
------- --------- --------- ---------
------- --------- --------- ---------
</TABLE>

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. As of January 1, 1996 the plan was changed to
provide a fixed monthly benefit for medical benefits; accordingly, information
for the health care cost trend rate is not applicable for the nine months ended
September 30, 1996. The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 7.25 percent, 7.25 percent,
8.00 percent, and 7.57 percent as of September 30, 1996, December 31, 1995,
December 31, 1994, and December 31, 1993, respectively.

(8) RELATED PARTY TRANSACTIONS

The Company pledged bonds and securities with a carrying value of $131
million at September 30, 1996, as collateral for affiliates' indebtedness,
including the collateral pledged for the credit arrangements discussed in note
5.

F-25
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(8) RELATED PARTY TRANSACTIONS (CONTINUED)

The following summarizes transactions of the Company with Lartnec and its
subsidiaries:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEARS ENDED DECEMBER 31,
SEPTEMBER 30, -------------------------------
1996 1995 1994 1993
-------------- --------- --------- ---------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Capital contributions............................... $ 4,463 $ 41,157 $ 4,959 $ 310
Management, administrative, data processing, and
other services fees charged to certain subsidiaries
of Lartnec......................................... 7,508 9,164 8,162 7,500
Interest income from financings to partnerships in
which a subsidiary of Lartnec has an interest...... 4,700 6,000 4,890 4,813
Investments in bonds and accrued interest in Lartnec
and subsidiaries as of December 31................. 8,127 12,868 17,242 20,813
Contribution of joint venture interests and sale of
partnership interests to partnerships in which a
subsidiary of Lartnec has an interest.............. 1,638 10,957 -- --
Purchase of limited partnership interest in which a
subsidiary of Lartnec has an interest.............. 2,160 -- -- --
Investments in partnerships and joint ventures in
which a subsidiary of Lartnec has an interest...... 16,420 9,625 4,870 --
Purchase of investments backed by the assets of a
trust which acquired loans from a subsidiary of
Lartnec............................................ 46,755 -- -- --
Investments in mortgage loans from joint ventures in
which a subsidiary of Lartnec has a partnership
interest at December 31............................ 75,373 63,977 84,344 75,766
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......................................... 2,026 2,555 1,301 1,811
</TABLE>

(9) REINSURANCE

At September 30, 1996, 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 September 30, 1996, December 31,
1995, December 31, 1994, and December 31, 1993, totaled approximately $2,548
million, $2,916 million, $3,265 million, and $3,247 million, respectively.

F-26
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(9) REINSURANCE (CONTINUED)

Total life premiums ceded amounted to $11.3 million, $14.2 million, $13.7
million, and $15.3 million in September 30, 1996 and for the years ended
December 31, 1995, 1994, and 1993, respectively. Total life premiums assumed
amounted to $1.0 million, $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 $115 million at
September 30, 1996. Approximately $110 million was outstanding under these
agreements at September 30, 1996, which are collateralized by Company
investments of approximately $131 million.

The Company has agreed to make loans to newly formed partnerships, of which
$19,600,000 was outstanding as of September 30, 1996.

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 $11 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 certain individual
life insurance policies which were underwritten and sold by AmerUs Life within
Texas from and after 1980. The complaint alleges that sales presentations and
policy illustrations misrepresented that premiums would "vanish" after a stated
number of years, without adequate disclosure of the effect of changes in the
policy dividends. AmerUs Life has denied the allegations contained in such
complaint and denies any wrongdoing in connection with such allegations. The
parties have engaged in discovery, but a hearing on certification of the class
has not yet been held.

The parties are engaged in a court-initiated mediation process in the Texas
litigation, and, in light of the uncertainties, hazards and expenses of
litigation, have discussed a number of different settlement approaches,
including a nationwide class settlement of certain market conduct issues for a
substantial block of the Company's traditional whole life policies. Progress in
negotiating such a class settlement appears to have been made, but substantial
unresolved issues remain and no agreement has been reached. Even if such
agreement were reached, the court would have to approve its terms. Should a
settlement satisfactory to the Company not be reached or not be approved, the
Company would continue to vigorously defend against the claims asserted,
including the existence of a legitimate class.

Due to the potential that a settlement may be reached in this case, the
Company has incurred a significant charge to income for the first nine months of
1996. Based upon its current estimates of the

F-27
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(10) COMMITMENTS AND CONTINGENCIES (CONTINUED)

range of loss at between five and eight million dollars, the Company has
established a reserve of five million dollars. The eventual costs of any
settlement cannot be precisely determined at this time, and may be more or less
than the amount of the range.

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

(11) STOCKHOLDER'S EQUITY

Generally, the stockholder's equity 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 Subsidiaries without the
prior approval of the Iowa Commissioner.

The Company made additional contributions to the Non-Life Insurance
Subsidiaries amounting to $4.5 million, $41.2 million, $5.0 million, and $0.3
million in the nine months ended September 30, 1996 and the years ended December
31, 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 $54.2 million, $49.3 million, $20.8
million and $28.2 million in the nine months ended September 30, 1996 and the
years ended December 31, 1995, 1994, and 1993, respectively.

The Company's statutory surplus and capital was $162.7 million, $155.1
million and $183.6 million at September 30, 1996, December 31, 1995, and
December 31, 1994, respectively.

The pro forma unaudited statutory surplus and capital as of September 30,
1996, after the Reorganization and assuming the Capital Contribution, is as
follows (in millions):

<TABLE>
<CAPTION>
(UNAUDITED)
-------------
<S> <C>
Statutory surplus and capital at September 30, 1996............................. $ 163
Capital Contribution............................................................ (79)
Capital contribution to AmerUs Life............................................. 175
------
Pro forma statutory surplus and capital at September 30, 1996................... $ 259
------
------
</TABLE>

F-28
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(12) STATUTORY ACCOUNTING PRACTICES (CONTINUED)
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 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, caps and
swaptions) 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.

F-29
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(13) FINANCIAL INSTRUMENTS (CONTINUED)

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

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
---------------------------------
NOTIONAL CARRYING FAIR
AMOUNT VALUE VALUE
----------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest rate caps................................................. $ 500,000 $ 4,498 $ 4,583
Swaptions.......................................................... 255,000 5,383 5,429
Receive fixed...................................................... 150,000 5,823 5,823
Pay fixed.......................................................... 75,000 187 187
----------- --------- ---------
$ 980,000 $ 15,891 $ 16,022
----------- --------- ---------
----------- --------- ---------

DECEMBER 31, 1995
---------------------------------
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
between 1999 and 2001, 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 1997 and 2001, involve the payment of
a maximum fixed interest rate when an indexed rate exceeds that fixed rate.
Swaption agreements, which expire between 1999 and 2002, involve the right to
enter into a swap transaction at a pre-specified price. These agreements are
used in conjunction with interest rate caps to protect against rising rates. The
amounts to be received or paid pursuant to those agreements are accrued and
recognized in the accompanying consolidated statements of income through an
adjustment to investment income over the life of the agreements. The net effect
on income from amortization and interest paid or received was an increase of
$0.9 million in the nine months ended September 30, 1996, and $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 was $0.5 million of deferred gains on interest rate
exchange agreements as of September 30, 1996, with no deferred gains as of
December 31, 1995, 1994, and 1993.

F-30
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(13) FINANCIAL INSTRUMENTS (CONTINUED)
The following table shows unrealized gains and losses on derivative
positions.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-----------------------------------------------------
TOTAL NET
NOTIONAL UNREALIZED UNREALIZED UNREALIZED
VALUE GAINS LOSSES GAINS (LOSSES)
----------- ----------- ----------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Receive fixed................................... $ 150,000 $ 4,295 $ -- $ 4,295
Pay fixed....................................... 75,000 187 -- 187
Interest rate caps.............................. 500,000 -- 1,552 (1,552)
Swaptions....................................... 255,000 -- -- --
----------- ----------- ----------- --------------
$ 980,000 $ 4,482 $ 1,552 $ 2,930
----------- ----------- ----------- --------------
----------- ----------- ----------- --------------

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.

F-31
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(13) FINANCIAL INSTRUMENTS (CONTINUED)
MATURITY SCHEDULE BY YEAR FOR DERIVATIVE PRODUCTS

<TABLE>
<CAPTION>
1996 1997 1998 1999 2000 2001 2002
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <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)........................... 5.63% 5.63% 5.63% 5.63%
Pay fixed swaps:
Notional amount (in thousands)......... $ 75,000
Weighted average:
Receive rate(A)........................ 5.63% 5.63% 5.63% 5.63% 5.63% 5.63%
Pay rate............................... 6.63% 6.63% 6.63% 6.63% 6.63% 6.63%
Total weighted average rates on swaps:
Receive rate........................... 7.11% 7.11% 7.11% 7.11% 5.63% 5.63%
Pay rate............................... 5.96% 5.96% 5.96% 5.96% 6.63% 6.63%
Interest rate caps
Notional amount (in thousands)......... $ 25,000 $ 125,000 $ 300,000 $ 50,000
Swaptions
Notional amount (in thousands)......... $ 50,000 $ 105,000 $ 100,000
Total notional value of swaps, caps and
swaptions (in thousands)................ $ 25,000 $ 325,000 $ 300,000 $ 230,000 $ 100,000
</TABLE>

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

(A) The actual variable rates in the agreements are based on three-month LIBOR,
and the table assumes that such rates will remain constant at September 30,
1996 levels. To the extent that actual rates change, the variable interest
rate information will change accordingly.

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

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

F-32
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(14) FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
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
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 September 30, 1996, 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.

Debt: fair values for 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.

F-33
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(14) FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

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

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------
SEPTEMBER 30, 1996 1995 1994
---------------------- ---------------------- ----------------------
CARRYING ESTIMATED CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE AMOUNT FAIR VALUE
---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Financial assets:
Securities available-for-sale:
Fixed maturity................... $2,297,571 $2,297,571 $3,142,096 $3,142,096 $2,566,768 $2,566,768
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Equity securities................ $ 74,575 $ 74,575 $ 109,675 $ 109,675 $ 178,770 $ 178,770
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Short-term investments........... $ 12,002 $ 12,002 $ 39,353 $ 39,353 $ 8,529 $ 8,529
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Mortgage loans on real estate...... $ 260,233 $ 278,827 $ 353,597 $ 369,706 $ 447,663 $ 431,812
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Interest rate swaps:
Net receivable position.......... $ 5,823 $ 5,823 $ 11,887 $ 11,887 $ -- $ --
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Net payable position............. $ 187 $ 187 $ (3,392) $ (3,392) $ (1,819) $ (1,819)
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Interest rate caps................. $ 4,498 $ 4,583 $ 6,445 $ 4,110 $ 3,648 $ 3,626
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Swaptions............................ $ 5,383 $ 5,429 $ -- $ -- $ -- $ --
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Financial liabilities--policy
reserves for annuities.............. $1,433,003 $1,397,390 $1,524,801 $1,493,847 $1,575,131 $1,543,129
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Debt................................. $ 45,055 $ 45,055 $ 36,461 $ 36,461 $ 34,292 $ 34,292
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>

(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>
SEPTEMBER 30,
1996
PRO FORMA PRO FORMA ----------------
AS ADJUSTED ADJUSTMENT FOR
FOR THE THE CAPITAL
CAPITAL CONTRIBUTION
CONTRIBUTION --------------
-------------- (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.................................................... $ 10,481 $ (29,531) $ 40,012
-------------- -------------- ----------------
-------------- -------------- ----------------
Property and Equipment......................................... $ 4,600 $ (8,724) $ 13,324
-------------- -------------- ----------------
-------------- -------------- ----------------
Checks drawn in excess of bank balances........................ $ 43,811 $ (35,500) $ 8,311
-------------- -------------- ----------------
-------------- -------------- ----------------
Debt........................................................... $ 36,333 $ 8,722 $ 45,055
-------------- -------------- ----------------
-------------- -------------- ----------------
Stockholder's Equity........................................... $ 433,394 $ (79,000) $ 512,394
-------------- -------------- ----------------
-------------- -------------- ----------------
</TABLE>

Earnings per share have been computed on a pro forma basis by giving
retroactive effect to the issuance of 17 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.

F-34
<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 ALH SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
----------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information.............................. 4
Prospectus Summary................................. 5
Risk Factors....................................... 15
The Company........................................ 23
The Issuer......................................... 23
The Reorganization and Distribution of the Non-Life
Insurance Subsidiaries............................ 24
The Common Stock Offerings......................... 29
Ratio of Earnings to to Combined Fixed Charges and
Preferred Stock Dividends......................... 29
Capitalization..................................... 30
Use of Proceeds.................................... 31
Accounting Treatment............................... 31
Selected Consolidated Financial and Operating
Data.............................................. 31
Unaudited Pro Forma Condensed Consolidated
Financial Statements.............................. 33
Management's Discussion and Analysis of Results of
Operations and Financial Condition................ 41
Business........................................... 58
Supervision and Regulation......................... 81
Management......................................... 84
Management Compensation............................ 87
Certain Transactions and Relationships............. 95
Description of the Preferred Securities............ 101
Description of the Guarantee....................... 114
Description of the Junior Subordinated
Debentures........................................ 117
Relationship Among the Preferred Securities, the
Junior Subordinated Debentures and the
Guarantee......................................... 126
United States Federal Income Taxation.............. 128
ERISA Considerations............................... 131
Ownership of Common Stock.......................... 133
Underwriting....................................... 134
Validity of Securities............................. 135
Experts............................................ 135
Glossary of Certain Insurance and Other Defined
Terms............................................. 136
Index to Consolidated Financial Statements......... F-1
</TABLE>

THROUGH AND INCLUDING , 1997, (THE 25TH DAY AFTER THE DATE OF
THIS PROSPECTUS) ALL DEALERS EFFECTING TRANSACTIONS IN THE PREFERRED SECURITIES,
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.

3,000,000 PREFERRED SECURITIES

AMERUS CAPITAL I

% CUMULATIVE QUARTERLY
INCOME PREFERRED SECURITIES,
SERIES A (QUIPS-TM-)
GUARANTEED TO THE EXTENT THE ISSUER HAS FUNDS, AS SET FORTH HEREIN, BY

AMERUS LIFE HOLDINGS, INC.

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

PROSPECTUS

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

GOLDMAN, SACHS & CO.

REPRESENTATIVES OF THE UNDERWRITERS

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

It is anticipated that there will be expenses incurred by the Registrants in
connection with the issuance and distribution of the Preferred Securities as set
forth below. All such amounts (other than the SEC registration fee, NYSE listing
fee and the NASD filing fee) are estimated:

<TABLE>
<C> <S> <C>
(a) SEC registration fee......................................... $ 26,137
(b) Printing Fees and Expenses................................... *
(c) Accounting Fees and Expenses................................. *
(d) Legal Fees and Expenses...................................... *
(e) Blue Sky Fees and Expenses................................... *
(f) NYSE Listing Fee............................................. *
(g) Rating Agency Fees........................................... *
(h) Trustee's Fees............................................... *
(i) NASD Filing Fee.............................................. *
(j) Other........................................................ *
---------
Total...................................................... $ *
---------
---------
</TABLE>

- --------------
* To be supplied by amendment.

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'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 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.

Under the Trust Agreement, the Company will agree to indemnify each of the
Trustees of the Issuer or any predecessor Trustee for the Issuer, and to hold
the Trustees harmless against, any loss, damage, claims, liability or expense
incurred without negligence or bad faith on its part, arising out of or in

II-1
<PAGE>
connection with the acceptance or administration of the Trust Agreement,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties under the Trust Agreement.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, trustees or persons controlling the
Registrants pursuant to the foregoing provisions, the Registrants have been
informed 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.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

On August 1, 1996 ALH issued 10,000 shares of common stock to AmerUs Group
(which shares subsequently became shares of Class A Common Stock). Subsequently,
in December, 1996, ALH issued 14,490,000 shares of Class A Common Stock and
5,000,000 shares of Class B Common Stock. 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
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
*1.1 Form of Underwriting Agreement between the Issuer, ALH and AmerUs Life on the one hand, and the
Representatives of the Underwriters, on behalf of the Underwriters, on the other hand.
2.1 Plan of Reorganization dated October 27, 1995 (incorporated by reference to ALH's Registration
Statement on Form S-1 filed on September 18, 1996 (SEC file number 333-12239) (the "Common Stock
Offering")
3.1 Articles of Incorporation of the Company (incorporated by reference to the Common Stock Offering)
3.2 Bylaws of the Company (incorporated by reference to the Common Stock Offering)
3.3 Amended and Restated Articles of Incorporation of the Company (as approved by the Iowa Insurance
Commissioner) (incorporated by reference to Amendment No. 3 to the Common Stock Offering filed on
December 12, 1996 ("Common Amendment No. 3") Exhibit No. 3.5)
3.4 Certificate of Trust of the Issuer
3.5 Trust Agreement
3.6 Form of Amended and Restated Trust Agreement
4.1 Form of Indenture between the Company and Wilmington Trust Company, as Indenture Trustee
4.2 Form of Preferred Security (included in Exhibit 3.6)
4.3 Form of Junior Subordinated Debenture (included in Exhibit 3.6)
**4.4 Form of Guarantee Agreement between the Company and Wilmington Trust Company, as Guarantee Trustee
(as revised)
**5.1 Opinion of James A. Smallenberger, Esq.
**5.2 Opinion of Richards, Layton & Finger
**8.1 Opinion of Sidley & Austin re: certain Tax Matters
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
10.1 Amended and Restated Intercompany Agreement dated as of December 1, 1996, among American Mutual
Holding Company, AmerUs Group Co. and the Company (incorporated by reference to Common Amendment No.
3 Exhibit 10.81)
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. (incorporated by reference to
Amendment No. 1 to the Common Stock Offering filed on November 7, 1996 ("Common Amendment No. 1"))
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.
(incorporated by reference to Common Amendment No. 1)
10.4 Agreement and Plan of Merger, dated as of August 24, 1994, among Central Life Assurance Company and
American Mutual Life Insurance Company (incorporated by reference to Common Stock Offering)
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
(incorporated by reference to Common Stock Offering)
10.6 All*AmerUs Supplemental Executive Retirement Plan, effective January 1, 1996 (incorporated by
reference to Common Stock Offering)
10.7 American Mutual Life Insurance Company Supplemental Pension Plan (which was curtailed as of December
31, 1995) (incorporated by reference to Common Stock Offering)
10.8 Central Life Assurance Company Supplemental Pension Plan (which was curtailed as of December 31,
1995) (incorporated by reference to the paper-only filing of Common Amendment No. 1 ("Paper
Filing"))
10.9 Management Incentive Plan (incorporated by reference to Paper Filing)
10.10 AmerUs Life Insurance Company Performance Share Plan (incorporated by reference to Paper Filing)
10.11 AmerUs Life Stock Incentive Plan (incorporated by reference to Common Stock Offering)
10.12 Employment Agreement, dated February 1, 1995, between American Mutual Life Insurance Company and Sam
C. Kalainov (incorporated by reference to Common Stock Offering)
10.13 AmerUs Life Non-Employee Director Stock Plan (incorporated by reference to Common Stock Offering)
10.14 Modification of Real Estate Contract, dated as of July 1, 1996, between AmerUs Life Insurance Company
and AmerUs Properties, Inc. (incorporated by reference to Common Stock Offering)
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.) (incorporated by
reference to Common Stock Offering)
10.16 Management Contract, dated January 1, 1993, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc.) (incorporated by reference to Common Amendment No. 1)
10.17 Management Contract, dated November 1, 1994, between American Mutual Life Insurance Company and CPI
Resource Group (now AmerUs Group Co.) (incorporated by reference to Common Stock Offering)
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
10.18 Management Contract, dated January 1, 1993, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc.) (incorporated by reference to Common Stock Offering)
10.19 Management Contract, dated January 1, 1995, between American Mutual Life Insurance Company and
Central Properties, Inc. (now AmerUs Properties, Inc.) (incorporated by reference to Common Stock
Offering)
10.20 Management Contract, dated July 1, 1994, between Central Life Assurance Company and CPI Resource
Group (now AmerUs Group Co.) (incorporated by reference to Common Stock Offering)
10.21 Management Contract, dated February 1, 1994, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc.) (incorporated by reference to Paper Filing)
10.22 Management Contract, dated May 1, 1994, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc. ) (incorporated by reference to Common Stock Offering)
10.23 Management Contract, dated February 1, 1994, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc. ) (incorporated by reference to Common Stock Offering)
10.24 Management Contract, dated January 4, 1994, between Central Life Assurance Company and CPI Resource
Group (now AmerUs Group Co.) (incorporated by reference to Common Stock Offering)
10.25 Management Contract, dated November 1, 1994, between American Mutual Life Insurance Company and CPI
Resource Group (now AmerUs Group Co.) (incorporated by reference to Common Stock Offering)
10.26 Lease - Business Property, dated December 1, 1995, between American Mutual Life Insurance Company and
AmerUs Leasing (incorporated by reference to Common Stock Offering)
10.27 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Bank (incorporated by reference to Common Stock Offering)
10.28 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Bank (incorporated by reference to Common Stock Offering)
10.29 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Bank (incorporated by reference to Common Stock Offering)
10.30 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Group (incorporated by reference to Common Stock Offering)
10.31 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Group (incorporated by reference to Common Stock Offering)
10.32 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.) (incorporated by reference to Paper Filing)
10.33 Form of Indemnification Agreement executed with directors and certain officers (incorporated by
reference to Common Stock Offering)
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
10.34 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. (incorporated by reference to Paper
Filing)
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 (incorporated by
reference to Common Amendment No. 1)
10.36 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. (incorporated by reference to Paper Filing)
10.37 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. (incorporated by reference to Paper Filing)
10.38 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 (incorporated by reference to Paper Filing) Company
10.39 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, (incorporated
by reference to Paper Filing) Inc.
10.40 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 (incorporated by reference to Paper Filing)
10.41 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.
(incorporated by reference to Paper Filing)
10.42 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.
(incorporated by reference to Paper Filing)
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 (incorporated by reference to Common Stock Offering)
10.44 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 (incorporated by reference to Paper Filing)
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 (incorporated
by reference to Common Stock Offering)
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
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 (incorporated by reference to Common Stock Offering)
10.47 Loan Servicing Agreement, dated August 1, 1990, between Central Life Assurance Company and Midland
Financial Mortgages, Inc. (now AmerUs Mortgage), incorporated by reference to 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. (incorporated by reference to Common Stock Offering)
10.49 Servicing Agreement, dated March 1996, between American Mutual Life Insurance Company and AmerUs
Properties, Inc. (incorporated by reference to Paper Filing)
10.50 Loan Servicing Agreement, dated September 1, 1994, between Central Life Assurance Company and Midland
Savings Bank, FSB (now AmerUs Bank) (incorporated by reference to Common Stock Offering)
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. (incorporated by
reference to Common Stock Offering)
10.52 Amendment to Service Agreement, dated as of May 1, 1996, between American Mutual Life Insurance
Company and AmerUs Bank (incorporated by reference to Common Stock Offering)
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), incorporated by reference to
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) (incorporated by reference to
Common Stock Offering)
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) (incorporated by reference to
Common Stock Offering)
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) (incorporated by reference to
Common Stock Offering)
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) (incorporated by reference to
Common Stock Offering)
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) (incorporated by reference to
Common Stock Offering)
10.59 Sixth Amendment to Data Processing Service Agreement, dated as of September 1, 1995, between American
Mutual Insurance Company and AmerUs Bank (incorporated by reference to Common Stock Offering)
</TABLE>

II-6
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
10.60 Seventh Amendment to Data Processing Service Agreement, dated as of January 1, 1996, between American
Mutual Life Insurance Company and AmerUs Bank (incorporated by reference to Common Stock Offering)
10.61 Data Processing Support Services Agreement, dated as of July 1, 1993, between Central Life Assurance
Company and Midland Savings Bank, FSB (now AmerUs Bank) (incorporated by reference to Paper Filing)
10.62 Miscellaneous Services Agreement, dated as of February 5, 1992, between Central Life Assurance
Company and Midland Savings Bank FSB (now AmerUs Bank) (incorporated by reference to Common Stock
Offering)
10.63 Investment Management Agreement, dated as of August 15, 1992, between Central Life Assurance Company
and Midland Savings Bank FSB (now AmerUs Bank) (incorporated by reference to Common Stock Offering)
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) (incorporated by reference to Common Stock
Offering)
10.65 Purchase Agreement, dated as of June 28, 1996, between AmerUs Life Insurance Company and AmerUs Bank
(incorporated by reference to Common Stock Offering)
10.66 Brokerage Contract dated January 1, 1995, among American Mutual Life Insurance Company and Midland
Investment Services, Inc. (now AmerUs Investments, Inc.) (incorporated by reference to Common Stock
Offering)
10.67 Servicing Agreement, dated March 1, 1992, between Central Life Assurance Company and Midland
Investment Services, Inc. (now AmerUs Investments, Inc.) (incorporated by reference to Common Stock
Offering)
10.68 Tax Allocation Agreement dated as of November 4, 1996 (incorporated by reference to Common Amendment
No. 1)
10.69 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. (incorporated by reference to Paper Filing)
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. (incorporated by reference to
Common Amendment No. 1)
10.71 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.
(incorporated by reference to Paper Filing)
</TABLE>

II-7
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
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. (incorporated by
reference to Common Amendment No. 1)
10.73 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
Assigment 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
(incorporated by reference to Paper Filing)
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. (incorporated by
reference to Common Amendment No. 1)
10.75 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 (incorporated by reference to Paper Filing)
10.76 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. (incorporated by reference to Paper Filing)
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. (incorporated by reference to Common Amendment
No. 1)
10.78 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.
(incorporated by reference to Paper Filing)
10.79 Assignment of Joint Venture Interest in 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. (incorporated by reference to Common Amendment
No. 1)
10.80 Revolving Credit and Term Loan Agreement, dated as of December 1996, among the Company, certain
Signatory Banks thereto and The Chase Manhattan Bank, Note issued by the Company and Borrower Pledge
Agreement (incorporated by reference to Common Amendment No. 3)
</TABLE>

II-8
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
11.1 Computation of Pro Forma Earnings Per Share (incorporated by reference to Amendment No. 2 to the
Common Stock Offering filed on December 4, 1996 ("Common Amendment No. 2"))
**12.1 Statement of Earnings to Combined Fixed Charges and Preferred Stock Dividends
21.1 List of Subsidiaries (incorporated by reference to Common Stock Offering)
**23.1 Consent of KPMG Peat Marwick LLP
**23.2 Consent of James A. Smallenberger, Esq. (to be included in Exhibit 5.1)
**23.3 Consent of Richards, Layton & Finger (to be included in Exhibit 5.2)
**23.4 Consent of Sidley & Austin (to be included in Exhibit 8.1)
**23.5 Consent of Tillinghast, a Towers Perrin Company
24.1 Powers of Attorney
25.1 Statement of Eligibility of Wilmington Trust Company as to the Guarantee
25.2 Statement of Eligibility of Wilmington Trust Company as to the Preferred Securities
25.3 Statement of Eligibility of Wilmington Trust Company as to the Junior Subordinated Debentures
27.1 Financial Data Schedule (incorporated by reference to Common Amendment No. 2)
99.1 Opinion of Tillinghast, a Towers Perrin Company, dated October 26, 1995, regarding the establishment
and operation of the Closed Block (Common Stock Offering Exhibit No. 99.3) (incorporated by
reference to Common Amendment No. 1 Exhibit 99.3)
</TABLE>

- --------------
*To be filed by amendment

**Filed herewith
PLEASE NOTE: The exhibit numbers identified above are identical to those used
in the Common Stock Offering, Common Amendment No. 1, the Paper Filing, Common
Amendment No. 2 or Common Amendment No. 3 except as otherwise indicated.

(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.

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

II-9
<PAGE>
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 this Preferred 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-10
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, AmerUs Life
Holdings, Inc., on behalf of the registrants, 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 December 19, 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 December 19, 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-11
<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
-------------------------------------------
(ATTORNEY IN FACT)
</TABLE>

II-12
<PAGE>
AMERUS LIFE HOLDINGS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
SCHEDULE PAGE
- --------- ---------

<C> <S> <C>
Report of Independent Auditors on Schedules............................................................... II-14

I Summary of Investments -- Other than Investments in Related Parties............................ II-15

III Supplementary Insurance Information............................................................ II-16

IV Reinsurance.................................................................................... II-17

V Valuation and Qualifying Accounts.............................................................. II-18
</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-13
<PAGE>

REPORT OF INDEPENDENT AUDITORS ON SCHEDULES

The Board of Directors
AmerUs Life Holdings, Inc.:

Under date of December 2, 1996, except as to note 1 which is as of December 11,
1996 we reported on the consolidated balance sheets of AmerUs Life Holdings,
Inc. and subsidiaries as of September 30, 1996, December 31, 1995 and December
31, 1994, and the related consolidated statements of income, stockholder's
equity, and cash flows for the nine months ended September 30, 1996 and 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.

KPMG Peat Marwick LLP

Des Moines, Iowa
December 2, 1996, except as to note 1,
which is as of December 11, 1996

II-14
<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
- ------------------------------------------------------------------ ------------- ------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
September 30, 1996
Fixed Maturities:
Bonds
United States Government and government agencies and
authorities.................................................. $ 532,278 $ 543,581 $ 543,581
States, municipalities and political subdivisions............. 0 0 0
Foreign governments........................................... 20,147 21,355 21,355
Public utilities.............................................. 290,072 298,430 298,430
Convertibles and bonds with warrants attached................. 11,977 13,190 13,190
All other corporate bonds..................................... 1,391,013 1,421,015 1,421,015
Certificates of deposit....................................... 0 0 0
Redeemable preferred stock.................................... 0 0 0
------------- ------------- ---------------
Total fixed maturities...................................... 2,245,487 2,297,571 2,297,571
------------- ------------- ---------------
Equity securities:
Common stocks
Public utilities.............................................. 1 2 2
Banks, trust and insurance companies.......................... 23,628 25,459 25,459
Industrial, miscellaneous and all other....................... 1,250 2,148 2,148
Nonredeemable preferred stocks.................................. 45,812 46,966 46,966
------------- ------------- ---------------
Total equity securities..................................... 70,691 74,576 74,576
------------- ------------- ---------------
Mortgage loans on real estate..................................... 260,233 260,233
Real estate....................................................... 40,012 40,012
Policy loans...................................................... 63,986 63,986
Other long-term investments....................................... 61,831 61,831
Short-term investments............................................ 12,002 12,002
------------- ---------------
Total investments........................................... $ 2,754,242 $ 2,810,210
------------- ---------------
------------- ---------------
</TABLE>

II-15
<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
Nine months ended
September 30, 1996 $ 319,692 $ 3,610,141 $ 0 $ 9,938 $ 182,451 $ 216,119 $ 314,631
Year ended December
31, 1995 $ 267,711 $ 3,621,537 $ 0 $ 16,617 $ 244,087 $ 285,244 $ 424,034
Year ended December
31, 1994 $ 404,361 $ 3,487,034 $ 0 $ 9,803 $ 237,912 $ 275,691 $ 414,935
Year ended December
31, 1993 $ 226,360 $ 269,854 $ 409,792

AMORTIZATION
OF DEFERRED
POLICY OTHER
ACQUISITION OPERATING PREMIUMS
SEGMENT COSTS EXPENSES WRITTEN
- -------------------------- ------------- ----------- ---------------

<S> <C> <C> <C>
LIFE INSURANCE
Nine months ended
September 30, 1996 $ 43,109 $ 42,930 n/a
Year ended December
31, 1995 $ 50,239 $ 58,655 n/a
Year ended December
31, 1994 $ 42,756 $ 68,604 n/a
Year ended December
31, 1993 $ 47,441 $ 58,637 n/a
</TABLE>

- --------------
(1) Includes policy reserves, policyholder funds, and dividends payable
(2) Policy and contract claims

II-16
<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-17
<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-18
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

EXHIBITS
TO
FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

AMERUS CAPITAL I
AMERUS LIFE HOLDINGS, INC.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT INDEX

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
10.7 American Mutual Life Insurance Company Supplemental Pension Plan (which was curtailed as of December
31, 1995) (incorporated by reference to Common Stock Offering)
10.8 Central Life Assurance Company Supplemental Pension Plan (which was curtailed as of December 31,
1995) (incorporated by reference to the paper-only filing of Common Amendment No. 1 ("Paper
Filing"))
10.9 Management Incentive Plan (incorporated by reference to Paper Filing)
10.10 AmerUs Life Insurance Company Performance Share Plan (incorporated by reference to Paper Filing)
10.11 AmerUs Life Stock Incentive Plan (incorporated by reference to Common Stock Offering)
10.12 Employment Agreement, dated February 1, 1995, between American Mutual Life Insurance Company and Sam
C. Kalainov (incorporated by reference to Common Stock Offering)
10.13 AmerUs Life Non-Employee Director Stock Plan (incorporated by reference to Common Stock Offering)
10.14 Modification of Real Estate Contract, dated as of July 1, 1996, between AmerUs Life Insurance Company
and AmerUs Properties, Inc. (incorporated by reference to Common Stock Offering)
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.) (incorporated by
reference to Common Stock Offering)
10.16 Management Contract, dated January 1, 1993, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc.) (incorporated by reference to Common Amendment No. 1)
10.17 Management Contract, dated November 1, 1994, between American Mutual Life Insurance Company and CPI
Resource Group (now AmerUs Group Co.) (incorporated by reference to Common Stock Offering)
10.18 Management Contract, dated January 1, 1993, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc.) (incorporated by reference to Common Stock Offering)
10.19 Management Contract, dated January 1, 1995, between American Mutual Life Insurance Company and
Central Properties, Inc. (now AmerUs Properties, Inc.) (incorporated by reference to Common Stock
Offering)
10.20 Management Contract, dated July 1, 1994, between Central Life Assurance Company and CPI Resource
Group (now AmerUs Group Co.) (incorporated by reference to Common Stock Offering)
10.21 Management Contract, dated February 1, 1994, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc.) (incorporated by reference to Paper Filing)
10.22 Management Contract, dated May 1, 1994, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc. ) (incorporated by reference to Common Stock Offering)
10.23 Management Contract, dated February 1, 1994, between Central Life Assurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc. ) (incorporated by reference to Common Stock Offering)
10.24 Management Contract, dated January 4, 1994, between Central Life Assurance Company and CPI Resource
Group (now AmerUs Group Co.) (incorporated by reference to Common Stock Offering)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
10.25 Management Contract, dated November 1, 1994, between American Mutual Life Insurance Company and CPI
Resource Group (now AmerUs Group Co.) (incorporated by reference to Common Stock Offering)
10.26 Lease - Business Property, dated December 1, 1995, between American Mutual Life Insurance Company and
AmerUs Leasing (incorporated by reference to Common Stock Offering)
10.27 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Bank (incorporated by reference to Common Stock Offering)
10.28 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Bank (incorporated by reference to Common Stock Offering)
10.29 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Bank (incorporated by reference to Common Stock Offering)
10.30 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Group (incorporated by reference to Common Stock Offering)
10.31 Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Group (incorporated by reference to Common Stock Offering)
10.32 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.) (incorporated by reference to Paper Filing)
10.33 Form of Indemnification Agreement executed with directors and certain officers (incorporated by
reference to Common Stock Offering)
10.34 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. (incorporated by reference to Paper
Filing)
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 (incorporated by
reference to Common Amendment No. 1)
10.36 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. (incorporated by reference to Paper Filing)
10.37 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. (incorporated by reference to Paper Filing)
10.38 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 (incorporated by reference to Paper Filing) Company
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
10.39 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, (incorporated
by reference to Paper Filing) Inc.
10.40 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 (incorporated by reference to Paper Filing)
10.41 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.
(incorporated by reference to Paper Filing)
10.42 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.
(incorporated by reference to Paper Filing)
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 (incorporated by reference to Common Stock Offering)
10.44 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 (incorporated by reference to Paper Filing)
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 (incorporated
by reference to Common Stock Offering)
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 (incorporated by reference to Common Stock Offering)
10.47 Loan Servicing Agreement, dated August 1, 1990, between Central Life Assurance Company and Midland
Financial Mortgages, Inc. (now AmerUs Mortgage), incorporated by reference to 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. (incorporated by reference to Common Stock Offering)
10.49 Servicing Agreement, dated March 1996, between American Mutual Life Insurance Company and AmerUs
Properties, Inc. (incorporated by reference to Paper Filing)
10.50 Loan Servicing Agreement, dated September 1, 1994, between Central Life Assurance Company and Midland
Savings Bank, FSB (now AmerUs Bank) (incorporated by reference to Common Stock Offering)
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. (incorporated by
reference to Common Stock Offering)
10.52 Amendment to Service Agreement, dated as of May 1, 1996, between American Mutual Life Insurance
Company and AmerUs Bank (incorporated by reference to Common Stock Offering)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
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), incorporated by reference to
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) (incorporated by reference to
Common Stock Offering)
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) (incorporated by reference to
Common Stock Offering)
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) (incorporated by reference to
Common Stock Offering)
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) (incorporated by reference to
Common Stock Offering)
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) (incorporated by reference to
Common Stock Offering)
10.59 Sixth Amendment to Data Processing Service Agreement, dated as of September 1, 1995, between American
Mutual Insurance Company and AmerUs Bank (incorporated by reference to Common Stock Offering)
10.60 Seventh Amendment to Data Processing Service Agreement, dated as of January 1, 1996, between American
Mutual Life Insurance Company and AmerUs Bank (incorporated by reference to Common Stock Offering)
10.61 Data Processing Support Services Agreement, dated as of July 1, 1993, between Central Life Assurance
Company and Midland Savings Bank, FSB (now AmerUs Bank) (incorporated by reference to Paper Filing)
10.62 Miscellaneous Services Agreement, dated as of February 5, 1992, between Central Life Assurance
Company and Midland Savings Bank FSB (now AmerUs Bank) (incorporated by reference to Common Stock
Offering)
10.63 Investment Management Agreement, dated as of August 15, 1992, between Central Life Assurance Company
and Midland Savings Bank FSB (now AmerUs Bank) (incorporated by reference to Common Stock Offering)
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) (incorporated by reference to Common Stock
Offering)
10.65 Purchase Agreement, dated as of June 28, 1996, between AmerUs Life Insurance Company and AmerUs Bank
(incorporated by reference to Common Stock Offering)
10.66 Brokerage Contract dated January 1, 1995, among American Mutual Life Insurance Company and Midland
Investment Services, Inc. (now AmerUs Investments, Inc.) (incorporated by reference to Common Stock
Offering)
10.67 Servicing Agreement, dated March 1, 1992, between Central Life Assurance Company and Midland
Investment Services, Inc. (now AmerUs Investments, Inc.) (incorporated by reference to Common Stock
Offering)
10.68 Tax Allocation Agreement dated as of November 4, 1996 (incorporated by reference to Common Amendment
No. 1)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
10.69 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. (incorporated by reference to Paper Filing)
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. (incorporated by reference to
Common Amendment No. 1)
10.71 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.
(incorporated by reference to Paper Filing)
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. (incorporated by
reference to Common Amendment No. 1)
10.73 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
Assigment 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
(incorporated by reference to Paper Filing)
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. (incorporated by
reference to Common Amendment No. 1)
10.75 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 (incorporated by reference to Paper Filing)
10.76 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. (incorporated by reference to Paper Filing)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
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. (incorporated by reference to Common Amendment
No. 1)
10.78 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.
(incorporated by reference to Paper Filing)
10.79 Assignment of Joint Venture Interest in 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. (incorporated by reference to Common Amendment
No. 1)
10.80 Revolving Credit and Term Loan Agreement, dated as of December 1996, among the Company, certain
Signatory Banks thereto and The Chase Manhattan Bank, Note issued by the Company and Borrower Pledge
Agreement (incorporated by reference to Common Amendment No. 3)
11.1 Computation of Pro Forma Earnings Per Share (incorporated by reference to Amendment No. 2 to the
Common Stock Offering filed on December 4, 1996 ("Common Amendment No. 2"))
**12.1 Statement of Earnings to Combined Fixed Charges and Preferred Stock Dividends
21.1 List of Subsidiaries (incorporated by reference to Common Stock Offering)
**23.1 Consent of KPMG Peat Marwick LLP
**23.2 Consent of James A. Smallenberger, Esq. (to be included in Exhibit 5.1)
**23.3 Consent of Richards, Layton & Finger (to be included in Exhibit 5.2)
**23.4 Consent of Sidley & Austin (to be included in Exhibit 8.1)
**23.5 Consent of Tillinghast, a Towers Perrin Company
24.1 Powers of Attorney
25.1 Statement of Eligibility of Wilmington Trust Company as to the Guarantee
25.2 Statement of Eligibility of Wilmington Trust Company as to the Preferred Securities
25.3 Statement of Eligibility of Wilmington Trust Company as to the Junior Subordinated Debentures
27.1 Financial Data Schedule (incorporated by reference to Common Amendment No. 2)
99.1 Opinion of Tillinghast, a Towers Perrin Company, dated October 26, 1995, regarding the establishment
and operation of the Closed Block (Common Stock Offering Exhibit No. 99.3) (incorporated by
reference to Common Amendment No. 1 Exhibit 99.3)
</TABLE>

- --------------
*To be filed by amendment

<PAGE>

[Exhibit 4.4]

GUARANTEE AGREEMENT

Between

AmerUs Life Holdings, Inc.
(as Guarantor)

and

Wilmington Trust Company
(as Trustee)

dated as of

January , 1997

<PAGE>

CROSS-REFERENCE TABLE*

Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
- ------------------- ----------

310(a) . . . . . . . . . . . . . . . . . . . . . . . . . 4.01(a)
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . 4.01(c), 2.08
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . 1.01, 2.05, 3.02
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . 2.01, 3.02
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . 3.01(d)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . 2.07
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . 3.01
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . 3.01(d)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . 5.04(a), 2.06
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . 5.03
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . 2.02
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(b)
318(b) . . . . . . . . . . . . . . . . . . . . . . . . . 2.01
318(c) . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(a)

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

* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.

<PAGE>

TABLE OF CONTENTS

ARTICLE I

DEFINITIONS

SECTION 1.01.Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II

TRUST INDENTURE ACT

SECTION 2.01.Trust Indenture Act; Application. . . . . . . . . . . . . . . . 4
SECTION 2.02.Lists of Holders. . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.03.Reports by the Guarantee Trustee. . . . . . . . . . . . . . . . 5
SECTION 2.04.Periodic Reports to Guarantee Trustee . . . . . . . . . . . . . 5
SECTION 2.05.Evidence of Compliance with Conditions Precedent. . . . . . . . 5
SECTION 2.06.Events of Default; Waiver . . . . . . . . . . . . . . . . . . . 5
SECTION 2.07.Event of Default; Notice. . . . . . . . . . . . . . . . . . . . 5
SECTION 2.08.Conflicting Interests . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE III

POWERS, DUTIES AND RIGHTS
OF GUARANTEE TRUSTEE

SECTION 3.01.Powers and Duties of the Guarantee Trustee. . . . . . . . . . . 6
SECTION 3.02.Certain Rights of Guarantee Trustee . . . . . . . . . . . . . . 7
SECTION 3.03.Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE IV

GUARANTEE TRUSTEE

SECTION 4.01.Guarantee Trustee; Eligibility. . . . . . . . . . . . . . . . . 9
SECTION 4.02.Appointment, Removal and Resignation of Guarantee Trustees. . . 9

<PAGE>

ARTICLE V

GUARANTEE

SECTION 5.01.Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . .10
SECTION 5.02.Waiver of Notice and Demand . . . . . . . . . . . . . . . . . .10
SECTION 5.03.Obligations Not Affected. . . . . . . . . . . . . . . . . . . .10
SECTION 5.04.Rights of Holders . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 5.05.Guarantee of Payment. . . . . . . . . . . . . . . . . . . . . .11
SECTION 5.06.Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 5.07.Independent Obligations . . . . . . . . . . . . . . . . . . . .12

ARTICLE VI

COVENANTS AND SUBORDINATION

SECTION 6.01.Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . .12
SECTION 6.02.Subordination . . . . . . . . . . . . . . . . . . . . . . . . .12
SECTION 6.03.Pari Passu Guarantees . . . . . . . . . . . . . . . . . . . . .12

ARTICLE VII

TERMINATION

SECTION 7.01.Termination . . . . . . . . . . . . . . . . . . . . . . . . . .12

ARTICLE VIII

MISCELLANEOUS
. . . . . . . . . . . . . . . . . .
SECTION 8.01.Successors and Assigns. . . . . . . . . . . . . . . . . . . . .13
SECTION 8.02.Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . .13
SECTION 8.03.Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
SECTION 8.04. Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . .14
SECTION 8.05. Interpretation . . . . . . . . . . . . . . . . . . . . . . . .14
SECTION 8.06. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . .15

<PAGE>

GUARANTEE AGREEMENT

This GUARANTEE AGREEMENT, dated as of January , 1997, is executed and
delivered by AmerUs Life Holdings, Inc., an Iowa corporation (the
"Guarantor"), and Wilmington Trust Company, a Delaware banking corporation,
as trustee (the "Guarantee Trustee"), for the benefit of the Holders (as
defined herein) from time to time of the Trust Securities (as defined herein)
of AmerUs Capital I, a Delaware statutory business trust (the "Issuer").

WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of January , 1997 among the Trustees of the Issuer
named therein and the Guarantor, as Depositor, the Issuer is issuing up to
$86,250,000 aggregate liquidation amount of its % Cumulative Quarterly
Income Preferred Securities, Series A (liquidation amount $25 per preferred
security) (the "Preferred Securities" and, together with the Common
Securities, the "Trust Securities") and up to $2,667,525 aggregate
liquidation amount of its Common Securities, each representing ownership
interests in the assets of the Issuer and having the terms set forth in the
Trust Agreement;

WHEREAS, the Trust Securities will be issued by the Issuer and the
proceeds thereof will be used to purchase the Debentures (as defined in the
Trust Agreement) of the Guarantor which will be deposited with Wilmington Trust
Company, as Property Trustee under the Trust Agreement, as trust assets; and

WHEREAS, as incentive for the Holders to purchase Preferred Securities
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth herein, to pay to the Holders the Guarantee Payments (as defined
herein) and to make certain other payments on the terms and conditions set forth
herein.

NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders from time to time of the Preferred
Securities.

ARTICLE I

DEFINITIONS

SECTION 1.01. DEFINITIONS. As used in this Guarantee Agreement, the
terms set forth below shall, unless the context otherwise requires, have the
following meanings. Capitalized or otherwise defined terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Trust Agreement as in effect on the date hereof unless otherwise indicated.

<PAGE>

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, PROVIDED, HOWEVER that an Affiliate of the
Guarantor shall not be deemed to include the Issuer. For the purposes of this
definition, "CONTROL" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "CONTROLLING" and "CONTROLLED" have meanings
correlative to the foregoing.

"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer (liquidation amount $25 per
Common Security).

"Debt" means, with respect to any Person, whether recourse is to all
or a portion of the assets of such Person and whether or not contingent, (i)
every obligation of such Person for money borrowed; (ii) every obligation of
such Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; and (vi) every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible or liable for, directly or indirectly,
as obligor or otherwise.

"Event of Default" shall mean a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement; provided, however,
that, except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received notice of default and shall not have cured such
default within 60 days after receipt of such notice.

"Guarantee" means this Guarantee Agreement, dated as of ,
1996, between AmerUs Life Holdings, Inc. and the Guarantee Trustee.

"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Preferred Securities,
to the extent not paid or made by or on behalf of the Issuer: (i) any
accrued and unpaid Distributions (as defined in the Trust Agreement) required
to be paid on the Trust Securities, to the extent the Issuer shall have funds
available therefor at such time, (ii) the redemption price, including all
accrued and unpaid Distributions to the date of redemption (the "Redemption
Price"), with respect to the Trust Securities, called for redemption by the
Issuer to the extent the Issuer shall have funds available therefor at such
time, and (iii) upon a voluntary or involuntary dissolution, winding-up or
termination of the Issuer, unless Debentures are distributed to the Holders,
or all of the outstanding Preferred Securities are redeemed, the lesser of
(a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Trust Securities to the date of payment to the extent
the Issuer shall have funds available therefor at such time, and (b) the
amount of assets of the Issuer remaining available for distribution to
Holders in liquidation of the Issuer (in either case, the "Liquidation
Distribution").

"Guarantee Trustee" means Wilmington Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.

"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities; provided, however, that in
determining whether the holders of the requisite

-2-

<PAGE>

percentage of Preferred Securities have given any request, notice, consent or
waiver hereunder, "Holder" shall not include the Guarantor, the Guarantee
Trustee or any Affiliate of the Guarantor or the Guarantee Trustee.

"Indenture" means the Indenture dated as of January , 1997, among
the Guarantor and Wilmington Trust Company, as trustee.

"Majority in liquidation amount of the Preferred Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount of all then outstanding Preferred Securities.

"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, Vice Chairman of the Board,
Chief Executive Officer, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
such Person, and delivered to the Guarantee Trustee. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee Agreement shall include:

(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;

(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;

(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and

(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.

"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.

"Responsible Officer" means, with respect to the Guarantee Trustee,
any vice-president, any assistant vice-president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, any financial services
officer or any other officer of the Corporate Trust Department of the Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.

-3-

<PAGE>

obligations are not superior in right of payment to the Guarantee or to other
Debt which is pari passu with, or subordinated to, the Guarantee; provided,
however, that Senior Debt shall not be deemed to include (a) any Debt of the
Guarantor which when incurred and without respect to any election under
Section 1111(b) of the Bankruptcy Reform Act of 1978, was without recourse to
the Guarantor, (b) any Debt of the Guarantor to any of its Subsidiaries (as
defined in the Indenture), (c) Debt to any employee of the Guarantor, (d)
any liability for taxes, (e) Debt or other monetary obligations to trade
creditors created or assumed by the Guarantor or any of its Subsidiaries in
the ordinary course of business in connection with the obtaining of goods,
materials or services (f) Debt issued under the Indenture and (g) the
Guarantee.

"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.01.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.

ARTICLE II

TRUST INDENTURE ACT

SECTION 2.01. TRUST INDENTURE ACT; APPLICATION.

(a) This Guarantee Agreement is subject to the provisions of the
Trust Indenture Act that are required to be part of this Guarantee
Agreement and shall, to the extent applicable, be governed by such
provisions.

(b) If and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Section
310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.

SECTION 2.02. LISTS OF HOLDERS.

(a) The Guarantor shall furnish or cause to be furnished to the
Guarantee Trustee (a) semiannually, not later than February 15 and
August 15 in each year, a list, in such form as the Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the
Preferred Securities and Common Securities ("List of Holders") as of a date
not more than 15 days prior to the delivery thereof, and (b) at such other
times as the Guarantee Trustee may request in writing, within 30 days after
the receipt by the Guarantor of any such request, a List of Holders as of a
date not more than 15 days prior to the time such list is furnished;
provided that the Guarantor shall not be obligated to provide such List of
Holders at any time when the List of Holders does not differ from the most
recent List of Holders given to the Guarantee Trustee by the Guarantor.
The Guarantee Trustee may destroy any List of Holders previously given to
it on receipt of a new List of Holders.

(b) The Guarantee Trustee shall comply with its obligations under
Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.

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SECTION 2.03. REPORTS BY THE GUARANTEE TRUSTEE. Not later than July
15 of each year, commencing July 15, 1997, the Guarantee Trustee shall provide
to the Holders such reports as are required by Section 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.

SECTION 2.04. PERIODIC REPORTS TO GUARANTEE TRUSTEE. The Guarantor
shall provide to the Guarantee Trustee, the Securities and Exchange Commission
and the Holders such documents, reports and information as required by Section
314 (if any) and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act.

SECTION 2.05. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Guarantee Agreement
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.

SECTION 2.06. EVENTS OF DEFAULT; WAIVER. The Holders of a Majority
in liquidation preference of the Preferred Securities may, by vote, on behalf
of the Holders of all of the Preferred Securities, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default
shall cease to exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Guarantee Agreement, but
no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon.

SECTION 2.07. EVENT OF DEFAULT; NOTICE.

(a) The Guarantee Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to
the Holders of the Preferred Securities, notices of all Events of Default
known to the Guarantee Trustee, unless such defaults have been cured before
the giving of such notice, provided that the Guarantee Trustee shall be
protected in withholding such notice if and so long as the board of
directors, the executive committee, or a trust committee of directors
and/or Responsible Officers of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Preferred Securities.

(b) The Guarantee Trustee shall not be deemed to have knowledge of
any Event of Default unless the Guarantee Trustee shall have received
written notice, or a Responsible Officer charged with the administration of
the Trust Agreement shall have obtained written notice, of such Event of
Default.

SECTION 2.08. CONFLICTING INTERESTS. The Trust Agreement and the
Indenture shall be deemed to be specifically described in this Guarantee
Agreement for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.

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ARTICLE III

POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE

SECTION 3.01. POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.

(a) This Guarantee Agreement shall be held by the Guarantee Trustee
for the benefit of the Holders of the Preferred Securities, and the
Guarantee Trustee shall not transfer this Guarantee Agreement to any Person
except a Holder of Preferred Securities exercising his or her rights
pursuant to Section 5.04(iv) or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee. The right, title and interest of the
Guarantee Trustee shall automatically vest in any Successor Guarantee
Trustee, upon acceptance by such Successor Guarantee Trustee of
its appointment hereunder, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Guarantee Trustee.

(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of
the Holders of the Preferred Securities.

(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically
set forth in this Guarantee Agreement, and no implied covenants shall be
read into this Guarantee Agreement against the Guarantee Trustee. In case
an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.06), the Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Guarantee Agreement, and use the
same degree of care and skill in its exercise thereof, as a prudent
individual would exercise or use under the circumstances in the conduct of
his or her own affairs.

(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except
that:

(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:

(A) the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this
Guarantee Agreement, and the Guarantee Trustee shall not be
liable except for the performance of such duties and obligations
as are specifically set forth in this Guarantee Agreement; and

(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to the
requirements of this

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Guarantee Agreement; but in the case of any such certificates or
opinions that by any provision hereof or of the Trust Indenture
Act are specifically required to be furnished to the Guarantee
Trustee, the Guarantee Trustee shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Guarantee Agreement;

(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment
was made;

(iii) the Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Preferred Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee Agreement;
and

(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if the Guarantee
Trustee shall have reasonable grounds for believing that the repayment
of such funds or liability is not reasonably assured to it under the
terms of this Guarantee Agreement or adequate indemnity against such
risk or liability is not reasonably assured to it.

SECTION 3.02. CERTAIN RIGHTS OF GUARANTEE TRUSTEE.

(a) Subject to the provisions of Section 3.01:

(i) The Guarantee Trustee may rely and shall be fully protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document reasonably believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties.

(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers'
Certificate unless otherwise prescribed herein.

(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting any
action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officers' Certificate which, upon
receipt of such request from the Guarantee Trustee, shall be promptly
delivered by the Guarantor.

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(iv) The Guarantee Trustee may (at the expense of the Guarantor)
consult with legal counsel, and the written advice or opinion of such
legal counsel with respect to legal matters shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such
advice or opinion. Such legal counsel may be legal counsel to the
Guarantor or any of its Affiliates and may be one of its employees.
The Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee Agreement
from any court of competent jurisdiction.

(v) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such
Holder shall have provided to the Guarantee Trustee such adequate
security and indemnity as would satisfy a reasonable person in the
position of the Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction, including
such reasonable advances as may be requested by the Guarantee Trustee;
provided that, nothing contained in this Section 3.02(a)(v) shall be
taken to relieve the Guarantee Trustee, upon the occurrence of an
Event of Default, of its obligation to exercise the rights and powers
vested in it by this Guarantee Agreement.

(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.

(vii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys, and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care by it hereunder.

(viii) Whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Guarantee Trustee (A) may request
instructions from the Holders of the Preferred Securities,
(B) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and (C)
shall be protected in acting in accordance with such instructions.

(b) No provision of this Guarantee Agreement shall be deemed to
impose any duty or obligation on the Guarantee Trustee to perform any act
or acts or exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in which it shall be illegal, or in which
the Guarantee Trustee shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or acts or to exercise any
such right, power, duty or obligation. No permissive power or authority
available to the Guarantee Trustee shall be construed to be a duty to act
in accordance with such power and authority.

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SECTION 3.03. INDEMNITY. The Guarantor agrees to indemnify the
Guarantee Trustee for, and to hold it harmless against, any loss, damage,
claims, liability, penalty or expense incurred without negligence or bad faith
on the part of the Guarantee Trustee, arising out of or in connection with the
acceptance or administration of this Guarantee Agreement, including the costs
and expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder. The
Guarantee Trustee will not claim or exact any lien or charge on any Guarantee
Payments as a result of any amount due to it under this Guarantee Agreement.

ARTICLE IV

GUARANTEE TRUSTEE

SECTION 4.01. GUARANTEE TRUSTEE; ELIGIBILITY.

(a) There shall at all times be a Guarantee Trustee which shall

(i) not be an Affiliate of the Guarantor; and

(ii) be a Person that is eligible pursuant to the Trust Indenture
Act to act as such and has a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000), and shall be a corporation
meeting the requirements of Section 310(a) of the Trust Indenture Act.
If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of a supervising or examining
authority, then, for the purposes of this Section 4.01(a)(ii) and to
the extent permitted by the Trust Indenture Act, the combined capital
and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of
condition so published.

(b) If at any time the Guarantee Trustee shall cease to be eligible
to so act under Section 4.01(a), the Guarantee Trustee shall immediately
resign in the manner and with the effect set out in Section 4.02(c).

(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act,
the Guarantee Trustee and Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.

SECTION 4.02. APPOINTMENT, REMOVAL AND RESIGNATION OF GUARANTEE
TRUSTEES.

(a) Subject to Section 4.02(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.

(b) The Guarantee Trustee shall not be removed until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and
delivered to the Guarantor.

(c) The Guarantee Trustee appointed hereunder shall hold office until
a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee

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Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing executed by the Guarantee Trustee
and delivered to the Guarantor, which resignation shall not take effect
until a Successor Guarantee Trustee has been appointed and has accepted
such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning
Guarantee Trustee.

(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.02 within 30 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court
of competent jurisdiction for appointment of a Successor Guarantee Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may
deem proper, appoint a Successor Guarantee Trustee.

ARTICLE V

GUARANTEE

SECTION 5.01. GUARANTEE. The Guarantor irrevocably and
unconditionally agrees to pay in full to the Holders the Guarantee Payments
(without duplication of amounts theretofore paid by or on behalf of the
Issuer), as and when due, regardless of any defense, right of set-off or
counterclaim which the Issuer may have or assert. The Guarantor's obligation
to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to
pay such amounts to the Holders.

SECTION 5.02. WAIVER OF NOTICE AND DEMAND. The Guarantor hereby
waives notice of acceptance of the Guarantee Agreement and of any liability to
which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the Guarantee Trustee, the Issuer or any
other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.

SECTION 5.03. OBLIGATIONS NOT AFFECTED. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee Agreement shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:

(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities
to be performed or observed by the Issuer;

(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions (other than an extension of time for payment
of Distributions that results from the extension of any interest payment
period on the Debentures as so provided in the Indenture), Redemption
Price, Liquidation Distribution or any other sums payable under the terms
of the Preferred Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the
Preferred Securities;

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(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities or any action on the part of the Issuer granting indulgence or
extension of any kind;

(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer
or any of the assets of the Issuer;

(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;

(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or

(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 5.03 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.

There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.

SECTION 5.04. RIGHTS OF HOLDERS. The Guarantor expressly
acknowledges that: (i) this Guarantee Agreement will be deposited with the
Guarantee Trustee to be held for the benefit of the Holders; (ii) the Guarantee
Trustee has the right to enforce this Guarantee Agreement on behalf of the
Holders; (iii) the Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of this
Guarantee Agreement or exercising any trust or power conferred upon the
Guarantee Trustee under this Guarantee Agreement; and (iv) any Holder of
Preferred Securities may institute a legal proceeding directly against the
Guarantor to enforce its rights under this Guarantee Agreement, without first
instituting a legal proceeding against the Guarantee Trustee, the Issuer or any
other Person.

SECTION 5.05. GUARANTEE OF PAYMENT. This Guarantee Agreement creates
a guarantee of payment and not merely of collection. This Guarantee Agreement
will not be discharged except by payment of the Guarantee Payments in full
(without duplication of amounts theretofore paid by the Issuer) or upon
distribution of Debentures to Holders as provided in the Trust Agreement.

SECTION 5.06. SUBROGATION. The Guarantor shall be subrogated to all
(if any) rights of the Holders against the Issuer in respect of any amounts paid
to the Holders by the Guarantor under this Guarantee Agreement and shall have
the right to waive payment by the Issuer pursuant to Section 5.01; PROVIDED,
HOWEVER, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any rights which
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in violation
of the preceding sentence,

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the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.

SECTION 5.07. INDEPENDENT OBLIGATIONS. The Guarantor acknowledges
that its obligations hereunder are independent of the obligations of the
Issuer with respect to the Preferred Securities and that the Guarantor shall be
liable as principal and as debtor hereunder to make Guarantee Payments
pursuant to the terms of this Guarantee Agreement notwithstanding the
occurrence of any event referred to in subsections (a) through (g),
inclusive, of Section 5.03 hereof.

ARTICLE VI

COVENANTS AND SUBORDINATION

SECTION 6.01. COVENANTS. So long as any Preferred Securities remain
outstanding, the Guarantor shall not, and shall cause its Subsidiaries (as
defined in the Indenture) not to, (i) declare or pay any dividends or
distributions on (other than dividends or distributions in common stock of the
Guarantor), or redeem, purchase, acquire or make a liquidation payment with
respect to, any of the Guarantor's outstanding capital stock or (ii) make any
payment of principal, interest or premium, if any, on or repay, repurchase or
redeem any debt securities that rank PARI PASSU with or junior to the Debentures
or make any guarantee payments with respect to the foregoing, if at such time
(i) the Guarantor shall be in default with respect to its Guarantee Payments
hereunder, (ii) there shall have occurred and be continuing any event of default
under the Indenture or (iii) the Guarantor shall have given notice of its
selection of an Extension Period (as defined in the Indenture) and such period,
or any extension thereof, is continuing.

SECTION 6.02. SUBORDINATION. This Guarantee Agreement will
constitute an unsecured obligation of the Guarantor and will rank subordinate
and junior in right of payment to all Senior Debt of the Guarantor.

SECTION 6.03. PARI PASSU GUARANTEES. This Guarantee Agreement shall
rank pari passu with any similar guarantee agreements issued by the Guarantor on
behalf of the holders of preferred securities issued by a business trust or
similar entity whose common securities are owned, directly or indirectly, by the
Guarantor.

ARTICLE VII

TERMINATION

SECTION 7.01. TERMINATION. This Guarantee Agreement shall
terminate and be of no further force and effect upon (i) full payment of the
Redemption Price of all Preferred Securities, (ii) the distribution of
Debentures to Holders of Preferred Securities in exchange for all of the
Preferred Securities or (iii) full payment of the amounts payable in
accordance with the Trust Agreement upon liquidation of the Issuer.
Notwithstanding the foregoing, this Guarantee Agreement will continue to be
effective or will be reinstated, as the case may be, if at any time any
Holder must restore payment of any sums paid with respect to Preferred
Securities or this Guarantee Agreement. Guarantor will indemnify each Holder
and hold it harmless from and against any loss it may suffer in such
circumstance.

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ARTICLE VIII

MISCELLANEOUS

SECTION 8.01. SUCCESSORS AND ASSIGNS. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Preferred Securities then outstanding. Except in
connection with a consolidation, merger or sale involving the Guarantor that is
permitted under Article Eight of the Indenture and pursuant to which the
assignee agrees in writing to perform the Guarantor's obligations hereunder, the
Guarantor shall not assign its obligations hereunder.

SECTION 8.02. AMENDMENTS. Except with respect to any changes that
do not adversely affect the rights of Holders (in which case no consent of
Holders will be required), this Guarantee Agreement may be amended only with the
prior approval of the Holders of not less than a Majority in liquidation amount
of the outstanding Preferred Securities. The provisions of Article VI of the
Trust Agreement concerning meetings of Holders shall apply to the giving of such
approval.

SECTION 8.03. NOTICES. Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first class
mail as follows:

(a) if given to the Guarantor, to the address set forth below or such
other address as the Guarantor may give notice of to the Guarantee Trustee:

AmerUs Life Holdings, Inc.
418 Sixth Avenue
Des Moines, Iowa 50309-2407

Facsimile No: (515) 283-3402
Attention: Secretary

(b) if given to the Issuer, at the address set forth below or such
other address as the Issuer may give notice of to the Guarantee Trustee:

AmerUs Capital I
c/o AmerUs Life Holdings, Inc.
418 Sixth Avenue
Des Moines, Iowa 50309-2407

Facsimile No: (515) 283-3402
Attention: Administrative Trustee

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with copy to:

Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001

Facsimile No: (302) 651-8882
Attention: Corporate Trust Administration

Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001

Facsimile No: (302) 651-8882
Attention: Corporate Trust Administration

(d) if given to any Holder of Preferred Securities, at the
address set forth on the books and records of the Issuer.

All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.

SECTION 8.04. BENEFIT. This Guarantee Agreement is solely for the
benefit of the Holders, and is not separately transferable from the Preferred
Securities.

SECTION 8.05. INTERPRETATION. In this Guarantee Agreement, unless
the context otherwise requires:

(a) Capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to
them in Section 1.01 unless otherwise indicated;

(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;

(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or
amended from time to time;

(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;

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(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires;

(f) a reference to the singular includes the plural and vice versa;
and

(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.

SECTION 8.06. GOVERNING LAW. THIS GUARANTEE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

This instrument may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.

THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.

AMERUS LIFE HOLDINGS, INC.

By:
-------------------------------
Name:
Title:

WILMINGTON TRUST COMPANY
as Guarantee Trustee

By:
-------------------------------
Name:
Title:

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EXHIBIT 5.1

[LETTERHEAD]

December 19, 1996

AmerUs Life Holdings, Inc.
418 Sixth Avenue
Des Moines, Iowa, 50309-2407

Ladies and Gentlemen:

Reference is made to the Registration Statement (Registration No.
333-113713) on Form S-1 filed on October 8, 1996, by AmerUs Life Holdings, Inc.,
an Iowa corporation (the "Company") and AmerUs Capital I, a Delaware business
trust (the "Trust") with the Securities and Exchange Commission ("SEC") under
the Securities Act of 1933, as amended (the "Securities Act")(such registration
statement, as amended from time to time, being hereinafter referred to as the
"Registration Statement") relating, in part, to the registration of
Deferrable Interest Subordinated Debentures (the "Debentures") and a Guarantee
with respect to preferred securities to be issued by an issuer trust to whom the
Debentures will be issued (the "Guarantee").

I am familiar with the proceedings to date with respect to the
proposed offering and sale of the Debentures and the Guarantee, 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 Debentures are to be issued under an Indenture among the
Company and the Trustee thereunder (hereinafter called the "Indenture"), a form
of which is filed as an exhibit to the Registration Statement. The Indenture
will be a valid instrument legally binding upon the Company and the Debentures
will be duly authorized and issued and will constitute the legal, valid and
binding obligations of the Company subject as to enforcement to bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws now or hereafter in effect relating to creditors' rights generally,when (a)
the Registration Statement, as finally amended, shall have become effective
under the Securities Act; (b) the Company's Board of Directors or a duly
authorized committee thereof shall have duly adopted final resolutions
authorizing the Indenture and the issuance, sale and delivery of the Debentures
as contemplated by the Registration

<PAGE>

AmerUs Life Holdings, Inc.
December 19, 1996
Page Two

Statement and the Indenture shall have been duly executed and delivered by the
Company and the Trustee thereunder, acting by their proper officers, and (c) the
Debentures shall have been duly executed by the proper officers of the Company
and authenticated by the Trustee in accordance with the provisions of the
Indenture and duly delivered to the purchasers thereof against payment of the
agreed consideration therefor.

3. The Guarantee is to be issued under a Guarantee Agreement between
the Company and the Trustee thereunder (hereinafter called the "Guarantee
Agreement"), a form of which is filed as an exhibit to the Registration
Statement. The Guarantee Agreement will be a valid instrument legally binding
upon the Company and the Guarantee will be duly authorized and issued and will
constitute the legal, valid and binding obligation of the Company subject as to
enforcement to bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors' rights generally, when (a) the Registration Statement, as finally
amended, shall have become effective under the Securities Act, (b) the Company's
Board of Directors or a duly authorized committee thereof shall have duly
adopted final resolutions authorizing the Guarantee Agreement and the issuance,
sale and delivery of the Guarantee as contemplated by the Registration Statement
and the Guarantee Agreement shall have been duly executed and delivered by the
Company and the Trustee thereunder, acting by their proper officers and duly
delivered.

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 Debentures or the
Guarantee.

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

<PAGE>

EXHIBIT 5.2

[LETTERHEAD OF RICHARDS, LAYTON & FINGER]

December 19, 1996

AmerUs Capital I
c/o AmerUs Life Holdings, Inc.
418 Sixth Avenue
Des Moines, Iowa, 50309-2407

RE: AMERUS CAPITAL I

Ladies and Gentlemen:

We have acted as special Delaware counsel for AmerUs Life Holdings,
Inc., an Iowa corporation ("AmerUs") and AmerUs Capital I, a Delaware
business trust (the "Trust"), in connection with the matters set forth herein.
At your request, this opinion is being furnished to you.

For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:

(a) The Certificate of Trust of the Trust, dated October 4,
1996 (the "Certificate"), as filed in the office of the Secretary of State of
the State of Delaware (the "Secretary of State") on October 4, 1996;

(b) The Trust Agreement, dated as of October 4, 1996, between
AmerUs and Wilmington Trust Company, a Delaware banking corporation, as
trustee;

(c) The Registration Statement (Registration No. 333-113713) on
Form S-1 filed on October 8, 1996, with the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, as amended (the
"Securities Act")(such registration statement, as amended from time to time,
being hereinafter referred to as the "Registration Statement"), including a
preliminary prospectus (the "Prospectus"), relating, in part, to the
registration of the Cumulative Quarterly Income Preferred Securities, Series
A of the Trust representing preferred undivided beneficial interests in the
assets of the Trust (each, a "Preferred Security" and collectively, the
"Preferred Securities");

(d) A form of Amended and Restated Trust Agreement, to be entered
into among AmerUs, the trustees of the Trust named therein, and the holders,
from time to time, of undivided beneficial interests in the Trust (including
the Exhibits thereto) (the "Trust Agreement"), attached as an exhibit to the
Registration Statement; and

<PAGE>

AmerUs Capital I
c/o AmerUs Life Holdings, Inc.
December 19, 1996
Page 2

(e) A Certificate of Good Standing for the Trust, dated the date
hereof, obtained from the Secretary of State.

Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.

For purposes of this opinion, we have not reviewed any documents
other than the documents listed in paragraphs (a) through (e) above. In
particular, we have not reviewed any document (other than the documents
listed in paragraphs (a) through (e) above) that is referred to in or
incorporated by reference into the documents reviewed by us. We have assumed
that there exists no provision in any document that we have not reviewed that
bears upon or is inconsistent with the opinions stated herein. We have
conducted no independent factual investigation of our own but rather have
relied solely upon the foregoing documents, the statements and information
set forth therein and the additional matters recited or assumed herein, all
of which we have assumed to be true, complete and accurate in all material
respects.

With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.

For purposes of this opinion, we have assumed (i) that the Trust
Agreement constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation and termination of the Trust, and that the Trust Agreement and the
Certificate are in full force and effect and have not been amended, (ii) except
to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the payment by each Person to whom
a Preferred Security is to be issued by the Trust (collectively, the "Preferred
Security Holders") for the Preferred Security acquired by it, in accordance with
the Trust Agreement and the Registration Statement, and (vii) that the Preferred
Securities are issued and

<PAGE>

AmerUs Capital I
c/o AmerUs Life Holdings, Inc.
December 19, 1996
Page 3

sold to the Preferred Security Holders in accordance with the Trust Agreement
and the Registration Statement. We have not participated in the preparation of
the Registration Statement and assume no responsibility for its contents.

This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.

Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:

1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, 12 Del. C.
Section 3801, et seq.

2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.

3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.

We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In
addition, we hereby consent to the use of our name under the heading
"Validity of Securities" in the Prospectus. In giving the foregoing consents,
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, as
amended, or the rules and regulations of the Securities and Exchange
Commission thereunder. Except as stated above, without our prior written
consent, this opinion may not be furnished or quoted to, or relied upon by,
any other Person for any purpose.

Very truly yours,

/s/ Richards, Layton & Finger

<PAGE>

December 19, 1996

AmerUs Life Holdings, Inc.
AmerUs Capital I
418 Sixth Avenue
Des Moines, Iowa 50309-2407

Ladies and Gentlemen:

We have acted as special counsel to AmerUs Life Holdings, Inc., an
Iowa corporation ("ALH"), and AmerUs Capital I, a Delaware statutory business
trust (the "Trust"), in connection with the proposed offering by the Trust of
its Cumulative Quarterly Income Preferred Securities (the "Preferred
Securities") as described in the Registration Statement on Form S-1 (the
"Registration Statement"), filed by ALH and the Trust with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended. The
Registration Statement includes the Prospectus (the "Prospectus") of ALH and the
Trust. Capitalized terms not defined herein have the meanings specified in the
Prospectus.

In rendering the opinion expressed below, we have examined the
Prospectus and such other documents as we have deemed relevant and necessary,
including, without limitation, the Form of Amended and Restated Trust Agreement,
the Form of Indenture and the Form of Guarantee, attached as Exhibits to the
Registration Statement. Such opinion is conditioned, among other things, upon
the accuracy and completeness of the facts, information and representations
contained in the Prospectus as of the date hereof and the continuing accuracy
and completeness thereof as of the date of the issuance of the Preferred
Securities. We have assumed that the transactions contemplated by the
Prospectus and such other documents will occur as provided therein and that
there will be no material change to the Prospectus or any of such other
documents between the date hereof and the date of the issuance of the Preferred
Securities.

<PAGE>

AmerUs Life Holdings, Inc.
AmerUs Capital I
December 19, 1996
Page 2

Based upon and subject to the foregoing, we are of the opinion that
the discussion set forth in the Prospectus under the caption "UNITED STATES
FEDERAL INCOME TAXATION" is a fair and accurate summary of the matters addressed
therein, based upon current law and the assumptions stated or referred to
therein.

We assume no obligation to update or supplement this letter to reflect
any facts or circumstances which may hereafter come to our attention with
respect to the opinion expressed above, including any changes in applicable law
which may hereafter occur.

We hereby consent to the filing of this letter as an Exhibit to the
Registration Statement and to all references to our Firm included in or made a
part of the Registration Statement.

Very truly yours,

/s/ Sidley & Austin

<PAGE>

AmerUs Life Holdings, Inc.

Exhibit 12.1 - Statement Re Computation of Ratios

Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends

Nine Months Ended Year Ended
September 30, December 31,

1996 1995 1995 1994 1993 1992 1991
(Dollars in thousands) Historical Pro forma Historical Pro forma

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings:

Income before income
taxes and accounting
changes $101,597 $96,800 $83,874 $110,550 $104,300 $26,131 $55,775 $57,312 $69,314

Add, Combined Fixed
Charges and Preferred
Stock Dividends 1,154 12,620 1,576 2,356 16,623 5,423 6,991 10,532 12,422
------------------------------ ----------------------------------------------------------------

Adjusted Earnings $102,751 $109,420 $85,450 $112,906 $120,923 $31,554 $62,766 $67,844 $81,736
------------------------------ ----------------------------------------------------------------
------------------------------ ----------------------------------------------------------------

Fixed Charges:

Interest on indebtedness
Historical $1,154 $1,154 $1,576 $2,356 $2,356 $5,423 $6,991 $10,532 $12,422
Pro forma 3,169 4,225

Amortization of debt
expense, pro forma 3,235 3,292
----------------------------- -------------------- ------ -----------------------------

Total Fixed Charges $1,154 $7,558 $1,576 $2,356 $9,873 $5,423 $6,991 $10,532 $12,422

Pre-tax earnings to
cover preferred stock
dividends 5,062 6,750
----------------------------- ----------------------------------------------------------------

Combined Fixed Charges
and Preferred Stock
Dividends $1,154 $12,620 $1,576 $2,356 $16,623 $5,423 $6,991 $10,532 $12,422
----------------------------- -------------------- ----------------------------------------
----------------------------- -------------------- ----------------------------------------

Ratio of Earnings to
Combined Fixed
Changes and Preferred
Stock Dividends 89.04 8.67 54.22 47.92 7.27 5.82 8.98 6.44 6.58

</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.

KPMG Peat Marwick LLP

Des Moines, Iowa
December 19, 1996

<PAGE>
[LETTERHEAD OF TILLINGHAST-TOWERS PERRIN]

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
December 19, 1996