10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004

OR

[  ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number 001-15166

AMERUS GROUP CO.

(Exact name of Registrant as specified in its charter)

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

699 Walnut Street
Des Moines, Iowa 50309-3948
(Address of principal executive offices)

Registrant’s telephone number, including area code (515) 362-3600

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

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).   Yes [X]   No [  ]

The number of shares outstanding of each of the Registrant’s classes of common stock on August 3, 2004 was as follows:

Common Stock 39,110,013 shares

Exhibit index - Page 42
Page 1 of 43

1

INDEX

	Page No.
PART I - FINANCIAL INFORMATION		4
Item 1. Financial Statements		4
Consolidated Balance Sheets June 30, 2004 (Unaudited) and December 31, 2003		4
Consolidated Statements of Income (Unaudited) For the Three and Six Months Ended June 30, 2004 and 2003		6
Consolidated Statements of Comprehensive Income (Unaudited) For the Three and Six Months Ended June 30, 2004 and 2003		7
Consolidated Statements of Stockholders’ Equity For the Six Months Ended June 30, 2004 (Unaudited) and the Year Ended December 31, 2003		8
Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended June 30, 2004 and 2003		9
Notes to Consolidated Financial Statements (Unaudited)		11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3. Quantitative and Qualitative Disclosures About Market Risk		35
Item 4. Controls and Procedures		37
PART II - OTHER INFORMATION		38
Item 1. Legal Proceedings		38
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities		38
Item 4. Submission of Matters to a Vote of Security Holders		38
Item 6. Exhibits and Reports on Form 8-K		40
Signatures		41
Index to Exhibits		42
Amended and Restated Articles of Incorporation
Amended and Restated Bylaws
Amended and Restated Retirement Agreement
Statement Re: Computation of Earnings Per Share
Computation of Ratios of Earnings to Fixed Charges
Certification of Chief Executive Officer
Certification of Chief Financial Officer
Certification of Chief Executive Officer
Certification of Chief Financial Officer

2

SAFE HARBOR STATEMENT

     This Quarterly Report on Form 10-Q, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to trends in operations and financial results and the business and the products of the Registrant and its subsidiaries, as well as other statements including words such as “anticipate”, “believe”, “plan”, “estimate”, “expect”, “intend”, and other similar expressions. Forward-looking statements are made based upon management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Such forward-looking statements are not guarantees of future performance. Factors that may cause our actual results to differ materially from those contemplated by these forward-looking statements include, among others, the following possibilities: (a) general economic conditions and other factors, including prevailing interest rate levels and stock and bond market performance, which may affect our ability to sell our products, the market value of our investments and the lapse rate and profitability of policies; (b) our ability to achieve anticipated levels of operational efficiencies and cost-saving initiatives and to meet cash requirements based upon projected liquidity sources; (c) customer response to new products, distribution channels and marketing initiatives; (d) mortality, morbidity, and other factors which may affect the profitability of our insurance products; (e) our ability to develop and maintain effective risk management policies and procedures and to maintain adequate reserves for future policy benefits and claims; (f) changes in the federal income tax and other federal laws, regulations, and interpretations, including federal regulatory measures that may significantly affect the insurance business including limitations on antitrust immunity, minimum solvency requirements, and changes to the tax advantages offered by life insurance and annuity products or programs with which they are used; (g) increasing competition in the sale of insurance and annuities and the recruitment of sales representatives; (h) regulatory changes, interpretations, initiatives or pronouncements, including those relating to the regulation of insurance companies and the regulation and sale of their products; (i) our ratings and those of our subsidiaries by independent rating organizations which we believe are particularly important to the sale of our products and the programs in which they are used; (j) the performance of our investment portfolios; (k) the impact of changes in standards of accounting; (l) our ability to integrate the business and operations of acquired entities; (m) expected protection products and accumulation products margins; (n) the impact of anticipated investment transactions; and (o) unanticipated litigation or regulatory investigations or examinations.

     There can be no assurance that other factors not currently anticipated by us will not materially and adversely affect our results of operations. You are cautioned not to place undue reliance on any forward-looking statements made by us or on our behalf. Forward-looking statements speak only as of the date the statement was made. We undertake no obligation to update or revise any forward-looking statement.

3

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

AMERUS GROUP CO.

CONSOLIDATED BALANCE SHEETS
($ in thousands)

	June 30,		December 31,
	2004		2003
	(unaudited)
Assets
Investments:
Securities available-for-sale at fair value:
Fixed maturity securities	$	14,428,207	$	13,944,961
Equity securities		77,818		74,890
Short-term investments		20,426		28,556
Securities held for trading purposes at fair value:
Fixed maturity securities		1,848,933		2,089,502
Equity securities		5,507		1,652
Short-term investments		580		591
Mortgage loans		843,624		968,572
Real estate		33		33
Policy loans		486,087		494,646
Other investments		328,754		339,436
Total investments		18,039,969		17,942,839
Cash and cash equivalents		459,209		274,150
Accrued investment income		207,531		205,492
Premiums, fees and other receivables		41,869		42,761
Reinsurance receivables		722,097		663,452
Deferred policy acquisition costs		1,266,258		1,021,856
Capitalized bonus interest		130,865		98,274
Value of business acquired		408,482		419,582
Goodwill		226,291		224,075
Property and equipment		48,218		48,849
Other assets		299,125		311,305
Separate account assets		254,939		261,657
Assets of discontinued operations		—		27,950
Total assets	$	22,104,853	$	21,542,242

See accompanying notes to consolidated financial statements.

4

AMERUS GROUP CO.
CONSOLIDATED BALANCE SHEETS
($ in thousands)

	June 30,			December 31,
	2004			2003
	(unaudited)
Liabilities and Stockholders’ Equity
Liabilities:
Policy reserves and policyowner funds:
Future life and annuity policy benefits	$	17,313,623		$	16,994,255
Policyowner funds		1,423,847			1,306,160
		18,737,470			18,300,415
Accrued expenses and other liabilities		747,643			443,589
Dividends payable to policyowners		254,378			321,233
Policy and contract claims		47,343			58,880
Income taxes payable		38,545			50,274
Deferred income taxes		54,633			80,861
Notes payable		545,838			596,101
Separate account liabilities		254,939			261,657
Liabilities of discontinued operations		—			19,421
Total liabilities		20,680,789			20,132,431
Stockholders’ equity:
Preferred Stock, no par value, 20,000,000 shares authorized, none issued		—			—
Common Stock, no par value, 230,000,000 shares authorized; 43,919,601 shares issued and 39,084,296 shares outstanding in 2004; 43,836,608 shares issued and 39,194,602 shares outstanding in 2003		43,920			43,836
Additional paid-in capital		1,187,189			1,184,237
Accumulated other comprehensive income (loss)		22,240			84,519
Unearned compensation		(1,440	)		(1,361	)
Retained earnings		336,911			255,006
Treasury stock, at cost (4,835,305 shares in 2004 and 4,642,006 shares in 2003)		(164,756	)		(156,426	)
Total stockholders’ equity		1,424,064			1,409,811
Total liabilities and stockholders’ equity	$	22,104,853		$	21,542,242

See accompanying notes to consolidated financial statements.

5

AMERUS GROUP CO.

CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except share data)

	For The Three Months Ended June 30,					For The Six Months Ended June 30,
	2004			2003		2004			2003
				(unaudited)
Revenues:
Insurance premiums	$	63,791		$	79,637	$	134,528		$	161,242
Product charges		54,284			48,703		103,846			95,534
Net investment income		251,311			251,707		508,186			506,820
Realized/unrealized capital gains (losses)		(44,550	)		58,969		(44,635	)		66,824
Other income		19,098			17,257		38,701			33,612
		343,934			456,273		740,626			864,032
Benefits and expenses:
Policyowner benefits		168,350			261,765		406,779			485,125
Underwriting, acquisition and other expenses		45,737			33,443		86,338			73,799
Restructuring costs		—			12,670		—			15,864
Amortization of deferred policy acquisition costs and value of business acquired		58,278			45,902		106,189			92,975
Dividends to policyowners		10,936			29,740		36,420			64,314
		283,301			383,520		635,726			732,077
Income from continuing operations		60,633			72,753		104,900			131,955
Interest expense		7,936			7,575		16,334			14,374
Income before income tax expense		52,697			65,178		88,566			117,581
Income tax expense		3,921			22,002		10,050			39,102
Net income from continuing operations		48,776			43,176		78,516			78,479
Income from discontinued operations, net of tax		—			535		3,899			1,022
Net income before cumulative effect of change in accounting		48,776			43,711		82,415			79,501
Cumulative effect of change in accounting, net of tax		—			—		(510	)		—
Net income	$	48,776		$	43,711	$	81,905		$	79,501
Net income from continuing operations per common share:
Basic	$	1.24		$	1.10	$	2.00		$	2.01
Diluted	$	1.20		$	1.10	$	1.93		$	1.99
Net income per common share:
Basic	$	1.24		$	1.12	$	2.08		$	2.03
Diluted	$	1.20		$	1.11	$	2.02		$	2.02
Weighted average common shares outstanding:
Basic		39,327,182			39,161,780		39,342,363			39,112,346
Diluted		40,760,364			39,404,467		40,619,242			39,354,894

See accompanying notes to consolidated financial statements.

6

AMERUS GROUP CO.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
($ in thousands)

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2004			2003			2004			2003
				(unaudited)
Net income	$	48,776		$	43,711		$	81,905		$	79,501
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during period		(197,725	)		101,516			(130,748	)		131,376
Less: Reclassification adjustment for gains (losses) included in net income		4,421			5,397			(34,935	)		17,773
Other comprehensive income (loss), before tax		(202,146	)		96,119			(95,813	)		113,603
Income tax (expense) benefit related to items of other comprehensive income		70,751			(33,642	)		33,534			(39,761	)
Other comprehensive income (loss), net of taxes		(131,395	)		62,477			(62,279	)		73,842
Comprehensive income (loss)	$	(82,619	)	$	106,188		$	19,626		$	153,343

See accompanying notes to consolidated financial statements.

7

AMERUS GROUP CO.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Six Months Ended June 30, 2004 and the Year Ended December 31, 2003
($ in thousands)

						Accumulated
			Additional			Other						Unallocated									Total
			Paid-In			Comprehensive			Unearned			ESOP			Retained			Treasury			Stockholders’
	Common Stock		Capital			Income (Loss)			Compensation			Shares			Earnings			Stock			Equity
Balance at December 31, 2002	$	43,656	$	1,179,646		$	88,522		$	(458	)	$	(1,443	)	$	109,517		$	(156,492	)	$	1,262,948
2003:
Net income		—		—			—			—			—			161,147			—			161,147
Net unrealized gain (loss) on securities		—		—			1,971			—			—			—			—			1,971
Net unrealized gain (loss) on derivatives designated as cash flow hedges		—		—			2,476			—			—			—			—			2,476
Change in accounting transfer of unrealized gain on available-for-sale securities to trading		—		—			(5,204	)		—			—			—			—			(5,204	)
Stock issued under various incentive plans, net of forfeitures		180		11,717			—			(903	)		—			—			66			11,060
PRIDES purchase contract adjustments and allocated fees and expenses		—		(7,280	)		—			—			—			—			—			(7,280	)
Dividends declared on common stock		—		—			—			—			—			(15,658	)		—			(15,658	)
Allocation of shares in leveraged ESOP		—		154			—			—			1,443			—			—			1,597
Minimum pension liability adjustment		—		—			(3,246	)		—			—			—			—			(3,246	)
Balance at December 31, 2003		43,836		1,184,237			84,519			(1,361	)		—			255,006			(156,426	)		1,409,811
2004 (unaudited):
Net income		—		—			—			—			—			81,905			—			81,905
Net unrealized gain (loss) on securities		—		—			(62,679	)		—			—			—			—			(62,679	)
Net unrealized gain (loss) on derivatives designated as cash flow hedges		—		—			400			—			—			—			—			400
Stock issued under various incentive plans, net of forfeitures		84		2,952			—			(79	)		—			—			823			3,780
Purchase of treasury stock		—		—			—			—			—			—			(9,153	)		(9,153	)
Balance at June 30, 2004	$	43,920	$	1,187,189		$	22,240		$	(1,440	)	$	—		$	336,911		$	(164,756	)	$	1,424,064

See accompanying notes to consolidated financial statements.

8

AMERUS GROUP CO.

CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)

	For The Six Months Ended
	June 30,
	2004			2003
	(unaudited)
Cash flows from operating activities
Net income	$	81,905		$	79,501
Adjustments to reconcile net income to net cash provided by operating activities:
Cumulative effect of change in accounting		510			—
Gain on sale of discontinued operations		(3,899	)		—
Product charges		(103,846	)		(95,534	)
Interest credited to policyowner account balances		233,800			251,959
Change in option value of equity indexed products and market value adjustments on total return strategy annuities		(13,555	)		27,209
Realized/unrealized capital (gains) losses		44,635			(66,824	)
DAC and VOBA amortization		106,189			92,975
DAC and VOBA capitalized		(186,658	)		(192,274	)
Change in:
Accrued investment income		(2,039	)		(777	)
Reinsurance receivables		(84,928	)		(14,526	)
Securities held for trading purposes:
Fixed maturities		209,725			18,566
Equity securities		(3,883	)		(1,813	)
Liabilities for future policy benefits		34,302			96,694
Accrued expenses and other liabilities		304,053			474,559
Policy and contract claims and other policyowner funds		105,585			57,126
Income taxes:
Current		(14,301	)		(22,528	)
Deferred		7,654			29,269
Other, net		(13,898	)		2,264
Net cash provided by operating activities		701,351			735,846
Cash flows from investing activities:
Purchase of fixed maturities available-for-sale		(3,192,310	)		(5,601,015	)
Proceeds from sale of fixed maturities available-for-sale		1,627,612			4,175,359
Maturities, calls and principal reductions of fixed maturities available-for-sale		700,210			1,157,234
Purchase of equity securities		(42,255	)		(7,155	)
Proceeds from sale of equity securities		39,429			12,180
Change in short-term investments, net		19,859			(1,933	)
Purchase of mortgage loans		(54,242	)		(80,332	)

9

AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
($ in thousands)

	For The Six Months Ended
	June 30,
	2004			2003
	(unaudited)
Proceeds from repayment and sale of mortgage loans		185,341			55,689
Purchase of real estate and other invested assets		(37,473	)		(200,854	)
Proceeds from sale of real estate and other invested assets		77,024			(4,153	)
Change in policy loans, net		8,559			4,746
Proceeds from sale of discontinued operations		15,000			—
Other assets, net		611			(798	)
Net cash used in investing activities		(652,635	)		(491,032	)
Cash flows from financing activities:
Deposits to policyowner account balances		1,099,912			1,030,023
Withdrawals from policyowner account balances		(907,933	)		(773,630	)
Change in debt, net		(50,263	)		(102,517	)
Stock issued under various incentive plans, net of forfeitures		3,780			7,099
Purchase of treasury stock		(9,153	)		—
Proceeds from issuance of PRIDES		—			137,398
Adoption and allocation of shares in leveraged ESOP		—			37
Net cash provided by financing activities		136,343			298,410
Net increase in cash		185,059			543,224
Cash and cash equivalents at beginning of period		274,150			102,612
Cash and cash equivalents at end of period	$	459,209		$	645,836
Supplemental disclosure of cash activities:
Interest paid	$	16,261		$	15,449
Income taxes paid	$	18,372		$	15,967

See accompanying notes to consolidated financial statements.

10

AMERUS GROUP CO.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(1) CONSOLIDATION AND BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All adjustments were of a normal recurring nature, unless otherwise noted in the Notes to Consolidated Financial Statements. Operating results for the six months ended June 30, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. The consolidated balance sheet at December 31, 2003 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information and for capitalized terms not defined in this Form 10-Q, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

     The accompanying consolidated financial statements include the accounts and operations of the Company and its wholly-owned subsidiaries, principally AmerUs Life Insurance Company (ALIC), AmerUs Annuity Group Co. and its subsidiaries (collectively, AAG), AmerUs Capital Management Group, Inc. (ACM), and ILICO Holdings, Inc., the holding company of Indianapolis Life Insurance Company (ILIC) and its subsidiaries (collectively, ILICO). All significant intercompany transactions and balances have been eliminated in consolidation.

     The Company has certain stock-based employee compensation plans which are accounted for under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. The plans are stock option plans for which no stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2004			2003			2004			2003
	($ in thousands, except share data)
Net income, as reported	$	48,776		$	43,711		$	81,905		$	79,501
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(919	)		(980	)		(2,081	)		(2,078	)
Pro forma net income	$	47,857		$	42,731		$	79,824		$	77,423
Earnings per share:
Basic - as reported	$	1.24		$	1.12		$	2.08		$	2.03
Basic - pro forma	$	1.22		$	1.09		$	2.03		$	1.98
Diluted - as reported	$	1.20		$	1.11		$	2.02		$	2.02
Diluted - pro forma	$	1.17		$	1.08		$	1.97		$	1.97

11

     Certain amounts in the 2003 financial statements have been reclassified to conform to the 2004 financial statement presentation.

(2) EARNINGS PER SHARE

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

     Diluted earnings per share applicable to the Company’s Optionally Convertible Equity-linked Accreting Notes (OCEANs^SM) are determined using the if-converted method for the number of days in the period in which the common stock price conversion condition is met. The common stock price conversion condition was not met for the six months ended June 30, 2004 and 2003. No undistributed net income has been allocated to the convertible securities holders since their participation in dividends with common stockholders is limited to the amount of the annual regular dividend.

     Diluted earnings per share applicable to the Company’s PRIDES^SM securities are determined using the treasury stock method as it is currently anticipated that holders of the PRIDES are more likely to tender cash in the future for the securities’ forward contract. The PRIDES added 777,528 and 650,534 shares to the diluted earnings per share calculation for the three and six months ended June 30, 2004, respectively.

(3) CLOSED BLOCK

     The Company has established two closed blocks, which we refer to as the Closed Block. The first was established on June 30, 1996 in connection with the reorganization of ALIC from a mutual company to a stock company. The second was established as of March 31, 2000 in connection with the reorganization of ILIC from a mutual company to a stock company. Insurance policies which had a dividend scale in effect as of each Closed Block establishment date were included in the Closed Block. The Closed Block was designed to provide reasonable assurance to owners of insurance policies included therein that, after the reorganization of ALIC and ILIC, assets would be available to maintain the dividend scales and interest credits in effect prior to the reorganization if the experience underlying such scales and credits continues.

     Summarized financial information of the Closed Block as of June 30, 2004 and December 31, 2003 and for the three months and six months ended June 30, 2004 and 2003 are as follows:

12

	June 30,		December 31,
	2004		2003
	($ in thousands)
Liabilities:
Future life and annuity policy benefits	$	2,816,832	$	2,845,365
Policyowner funds		8,573		9,232
Accrued expenses and other liabilities		60,299		44,473
Dividends payable to policyowners		173,314		173,703
Policy and contract claims		11,732		22,694
Policyowner dividend obligation		70,152		134,386
Total Liabilities		3,140,902		3,229,853
Assets:
Fixed maturity securities available-for-sale at fair value		1,946,412		2,027,177
Mortgage loans		77,065		80,170
Policy loans		337,434		346,823
Cash and cash equivalents		1,052		3,492
Accrued investment income		32,178		32,629
Premiums and fees receivable		85,993		55,134
Other assets		17		17
Total Assets		2,480,151		2,545,442
Maximum future earnings to be recognized from assets and liabilities of the Closed Block	$	660,751	$	684,411

13

	For The Three Months Ended June 30,
	2004			2003
	($ in thousands)
Operations:
Insurance premiums	$	44,684		$	55,009
Product charges		1,311			2,685
Net investment income		36,235			37,577
Realized gains (losses) on investments		(4,473	)		275
Policyowner benefits		(58,495	)		(56,690	)
Underwriting, acquisition and other expenses		(918	)		(1,115	)
Dividends to policyowners		(9,019	)		(27,738	)
Contribution from the Closed Block before income taxes	$	9,325		$	10,003

	For The Six Months Ended June 30,
	2004			2003
	($ in thousands)
Operations:
Insurance premiums	$	97,280		$	117,815
Product charges		1,401			6,224
Net investment income		71,969			77,316
Realized/unrealized gains (losses) on investments		(3,643	)		7,344
Policyowner benefits		(113,665	)		(128,519	)
Underwriting, acquisition and other expenses		(2,007	)		(2,246	)
Dividends to policyowners		(32,418	)		(57,649	)
Contribution from the Closed Block before income taxes	$	18,917		$	20,285

14

(4) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

     The Company accounts for derivatives, including certain derivative instruments embedded in other contracts, at fair value. Accounting for gains and losses resulting from changes in the values of derivatives is dependent upon the use of the derivative and its qualification for special hedge accounting. During the first six months of 2004 and 2003, realized/unrealized capital gains (losses) included an unrealized loss of $19.5 million and an unrealized gain of $19.4 million, respectively, from the change in fair value on the trading securities primarily backing the total return strategy products. Additionally, the first six months of 2004 and 2003 included an unrealized gain of $12.1 million and $15.7 million, respectively, from the change in fair value on call options used as a natural hedge of embedded options within equity indexed products. Policyowner benefits included an offsetting adjustment to contract liabilities for fair value changes in options embedded within the equity indexed products and fair value changes on total return strategy annuity contracts amounting to a decrease in expense of $13.6 million and an increase in expense of $27.2 million for the first six months of 2004 and 2003, respectively. In 2002, the Company undesignated a cash flow hedge and is now amortizing the amount in accumulated other comprehensive income (AOCI) to earnings over the remaining life of the swap, which amounted to $0.8 and $2.5 million in expense in the first six months of 2004 and 2003, respectively. The Company estimates that less than $0.1 million of after-tax derivative losses, included in AOCI, will be reclassified into earnings within the next twelve months. AOCI included an unrealized gain of $0.4 million and $1.8 million from the fair value change in interest rate swaps used to hedge the floating rate funding agreement liability during the first six months of 2004 and 2003, respectively.

     The following table summarizes the income (loss) impact of the market value adjustments on trading securities, derivatives and the cash flow hedge amortization for the six months ended June 30, 2004 and 2003:

	For the Six Months Ended June 30, 2004
	Total Return			Equity Linked
	Products			Products			Other			Total
				($ in thousands)
Fixed maturity securities held for trading	$	(16,092	)	$	—		$	(3,407	)	$	(19,499	)
Options on equity indexed products		—			14,297			(2,209	)		12,088
Market value adjustment to liabilities		9,244			481			3,830			13,555
Cash flow hedge amortization		—			—			(813	)		(813	)
DAC amortization impact of net adjustments above		147			(5,095	)		573			(4,375	)
Pre-tax total		(6,701	)		9,683			(2,026	)		956
Income taxes		2,345			(3,389	)		710			(334	)
After-tax total	$	(4,356	)	$	6,294		$	(1,316	)	$	622

	For the Six Months Ended June 30, 2003
	Total Return			Equity Linked
	Products			Products			Other			Total
				($ in thousands)
Fixed maturity securities held for trading	$	18,160		$	—		$	1,196		$	19,356
Options on equity indexed products		—			13,565			2,106			15,671
Market value adjustment to liabilities		(12,327	)		(14,882	)		—			(27,209	)
Cash flow hedge amortization		—			—			(2,478	)		(2,478	)
DAC amortization impact of net adjustments above		(439	)		624			(794	)		(609	)
Pre-tax total		5,394			(693	)		30			4,731
Income taxes		(1,889	)		244			(11	)		(1,656	)
After-tax total	$	3,505		$	(449	)	$	19		$	3,075

15

(5) FEDERAL INCOME TAXES

     The effective income tax rate for the six months ending June 30, 2004 and 2003 varied from the prevailing corporate rate as a result of tax exempt interest and dividends received deduction. The effective tax rate for the six months ending June 30, 2004 was also reduced by a reduction in the income tax accrual and a change in the deferred tax asset valuation allowance. The accrual reduction, amounting to $5.2 million recorded in the first quarter of 2004 and $2.7 million recorded in the second quarter of 2004, was for the release of provisions originally established for potential tax adjustments which have been settled or eliminated. In addition, during the second quarter of 2004, a deferred tax valuation allowance was reduced $10.4 million as a result of the realization of capital loss carryforwards.

(6) COMMITMENTS AND CONTINGENCIES

     In recent years, the life insurance industry, including the Company and its subsidiaries, have been subject to an increase in litigation pursued on behalf of purported classes of insurance purchasers, questioning the conduct of insurers in the marketing of their products. The Company is routinely involved in litigation and other proceedings, including class actions (such as pending class action lawsuits related to the use of purportedly inappropriate sales techniques and products for the senior market), reinsurance claims and regulatory proceedings arising in the ordinary course of its business. Some of these claims and legal actions are in jurisdictions where juries are given substantial latitude in assessing damages, including punitive and exemplary damages. In addition, regulatory bodies, such as state insurance departments and attorneys general, periodically make inquiries and conduct examinations concerning our compliance with insurance and other laws. We respond to such inquiries and cooperate with regulatory examinations in the ordinary course of business.

     Our litigation is subject to many uncertainties, and given its complexity and scope, the outcomes cannot be predicted. It is possible that our results of operations or cash flow in a particular quarterly or annual period could be materially affected by an ultimate unfavorable resolution of pending litigation and regulatory matters depending, in part, upon the results of operations or cash flow for such period. Management believes, however, that the ultimate outcome of all pending litigation and regulatory matters, after consideration of applicable reserves, should not have a material adverse effect on our financial position.

(7) EMPLOYEE BENEFIT PLANS

     The Company has a frozen defined benefit pension plan and also has defined benefit plans which provide supplemental retirement benefits to certain agents and executives. In addition to pension benefits, the Company also provides certain health care and life insurance benefits for retired employees. The following is a summary of net periodic benefit cost for these plans for the six months ended June 30, 2004 and 2003:

16

	Six Months Ended June 30,
	2004			2003
	($ in thousands)
Components of net periodic benefit cost:
Service cost	$	163		$	142
Interest cost		3,100			3,100
Expected return on plan assets		(2,428	)		(2,453	)
Amortization of prior service cost		44			20
Amortizaton of actuarial loss		124			22
Net periodic benefit cost		1,003			831
Curtailment		(951	)		—
Total (income) expense	$	52		$	831

     During the first six months of 2004, a gain of $1.0 million was recognized as a result of curtailing health care and life insurance benefits associated with the sale of the discontinued operations in January 2004.

(8) ASSETS HELD FOR SALE

     The Company listed its office building located in Indianapolis, Indiana, with a real estate broker during the second quarter of 2003. On June 30, 2003, the Company determined that the plan of sale criteria in SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” had been met. Accordingly, the carrying value of the building was adjusted to its estimated fair value less costs to sell, amounting to $15.5 million, which was based upon comparable properties marketed in Indianapolis at that time. The resulting $7.7 million pre-tax impairment loss was recorded as a restructuring cost in the consolidated statement of income in the second quarter of 2003.

     As provided by SFAS 144, the Company determined in the first quarter of 2004 that the fair value of the building required further adjustment based on prevailing market conditions for the property which have extended the time required to sell the building. The resulting change in fair value of the building was an additional $12.2 million pre-tax impairment loss which has been recorded in realized/unrealized capital losses in the consolidated statement of income. The carrying value of the building that is held for sale is included in the other assets line item of the consolidated balance sheet and amounted to $3.3 million at June 30, 2004 and $15.5 million at December 31, 2003.

(9) DISCONTINUED OPERATIONS

     In November 2003, the Company entered into an agreement to sell a wholly-owned subsidiary which conducts residential financing operations. The assets, liabilities and results of the residential financing operations have been classified as discontinued operations. The sale was completed in January 2004, resulting in an after-tax gain of $3.9 million. Income from discontinued operations net of tax was as follows:

17

	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2004		2003		2004		2003
			($ in thousands, except share data)
Operating income from discontinued operations, net of income taxes of $357 and $682 for second quarter and year to date 2003, respectively	$	—	$	535	$	—	$	1,022
Gain on sale of discontinued operations, net of income taxes of $2,571 in 2004		—		—		3,899		—
	$	—	$	535	$	3,899	$	1,022
Net income from discontinued operations per common share:
Basic	$	—	$	0.02	$	0.10	$	0.02
Diluted	$	—	$	0.01	$	0.10	$	0.03
Weighted average common shares outstanding:
Basic		39,327,182		39,161,780		39,342,363		39,112,346
Diluted		40,760,364		39,404,467		40,619,242		39,354,894

(10) ADOPTION OF SOP 03-1

     Effective January 1, 2004, the Company adopted Statement of Position 03-1 (SOP 03-1), “Accounting and Reporting by Insurance Enterprises for Certain Non-Traditional Long-Duration Insurance Contracts and for Separate Accounts,” issued by the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants. The adoption of SOP 03-1 resulted in establishing additional policy reserve liabilities for fees charged for insurance benefit features which are assessed in a manner that is expected to result in profits in earlier years and losses in subsequent years. The total effect of adopting SOP 03-1 (including reinsurance recoverables) as of January 1, 2004 and the establishment of reinsurance recoveries, amounted to a decrease of $0.8 million ($0.5 million after-tax) in net income which has been reflected as a cumulative effect of a change in accounting. The basic and diluted earnings per common share for the change in accounting amounted to $0.01 for the six months ended June 30, 2004.

     In addition, the adoption of SOP 03-1 established guidance for the accounting and presentation of costs related to sales inducements. There was no change to the Company’s method of accounting for sales inducements; however, the capitalized costs are now separately disclosed in the consolidated balance sheet and the related amortization expense is included in policyowner benefits in the consolidated statement of income. Prior to 2004, the capitalized costs were included in deferred policy acquisition costs and the amortization expense was included in the amortization of deferred policy acquisition costs. The 2003 amounts have been reclassified to conform with the 2004 presentation.

(11) OPERATING SEGMENTS

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

     Protection Products. The primary product offerings consist of interest-sensitive whole life, term life, universal life and equity indexed life insurance policies. These products are marketed on a national basis primarily through a Preferred Producer agency system, a Personal Producing General Agent (PPGA) distribution system and Independent Marketing Organizations (IMOs).

18

     Accumulation Products. The primary product offerings consist of traditional fixed annuities and equity indexed annuities, marketed on a national basis primarily through IMOs and independent brokers, and insurance contracts issued through funding agreements.

     The product offerings within each segment are of a very similar nature. Insurance premiums of the protection products segment primarily include term life products. Product charges of the protection products segment include interest-sensitive whole life, universal life and equity indexed life insurance products. Product charges of the accumulation products segment include traditional fixed and equity indexed annuities. Due to the similarity of products within each segment, premiums and product charges are shown by segment and not by specific product type.

     The Company uses the same accounting policies and procedures to measure operating segment income and assets as it uses to measure its consolidated income from operations and assets with the exception of the elimination of certain items which management believes are not necessarily indicative of overall operating trends. These items are shown between segment pre-tax operating income and net income on the following operating segment tables and are as follows:

1)	Realized gains and losses on open block assets.
2)	Market value changes and amortization of assets and liabilities associated with the accounting for derivatives, such as:

• Unrealized gains and losses on open block options and securities held for trading.

• Change in option value of equity indexed products and market value adjustments on total return strategy annuities.

• Cash flow hedge amortization.

3)	Amortization of deferred policy acquisition costs (DAC), value of business acquired (VOBA) and bonus interest related to the unrealized and realized gains and losses on the open block investments and the derivative adjustments.
4)	Restructuring costs.
5)	Certain reinsurance adjustments.
6)	Other income from non-insurance operations.
7)	Interest expense.
8)	Income tax expense.
9)	Income from discontinued operations.
10)	Cumulative effect of change in accounting.

     These items will fluctuate from period to period depending on the prevailing interest rate and economic environment or are not part of the core insurance operations. As a result, management believes they do not reflect the ongoing earnings capacity of the Company’s operating segments.

     Premiums, product charges, policyowner benefits, insurance expenses, amortization of DAC and VOBA and dividends to policyowners are attributed directly to each operating segment. Net investment income and closed block realized gains and losses on investments are allocated based on directly-related assets required for transacting the business of that segment. Other revenues and benefits and expenses which are deemed not to be associated with any specific segment are grouped together in the All Other category. These items primarily consist of holding company revenues and expenses, operations of the Company’s real estate management subsidiary, and accident and health insurance.

     Assets are segmented based on policy liabilities directly attributable to each segment. There are no significant intersegment transactions. Depreciation and amortization, excluding amortization of DAC and VOBA as previously discussed, are not significant. There have been no material changes in segment assets since December 31, 2003.

19

Operating Segment Income
($ in thousands)

	Three Months Ended June 30, 2004
	Protection			Accumulation					Total
	Products			Products		All Other			Consolidated
Revenues:
Insurance premiums	$	62,427		$	859	$	505		$	63,791
Product charges		41,640			12,644		—			54,284
Net investment income		81,186			168,218		1,907			251,311
Realized/unrealized gains (losses) on closed block investments		(4,473	)		—		—			(4,473	)
Other income		928			16,847		(37	)		17,738
		181,708			198,568		2,375			382,651
Benefits and expenses:
Policyowner benefits		91,205			114,261		(179	)		205,287
Underwriting, acquisition, and other expenses		19,115			20,219		6,403			45,737
Amortization of DAC and VOBA, net of open block loss adjustment of $7,002		25,527			25,749		—			51,276
Dividends to policyowners		10,934			2		—			10,936
		146,781			160,231		6,224			313,236
Segment pre-tax operating income	$	34,927		$	38,337	$	(3,849	)		69,415
Realized/unrealized gains (losses) on open block assets										(8,851	)
Unrealized gains (losses) on open block options and trading investments										(31,226	)
Change in option value of equity indexed products and market value adjustments on total return strategy annuities										37,288
Cash flow hedge amortization										(351	)
Amortization of DAC and VOBA due to open block gains and losses										(7,002	)
Other income from non-insurance operations										1,360
Income from continuing operations										60,633
Interest (expense)										(7,936	)
Income tax (expense)										(3,921	)
Net income									$	48,776

20

Operating Segment Income
($ in thousands)

	Three Months Ended June 30, 2003
	Protection		Accumulation					Total
	Products		Products		All Other			Consolidated
Revenues:
Insurance premiums	$	76,512	$	1,059	$	485		$	78,056
Product charges		39,804		8,899		—			48,703
Net investment income		80,706		168,183		2,818			251,707
Realized/unrealized gains (losses) on closed block investments		275		—		—			275
Other income		993		15,647		391			17,031
		198,290		193,788		3,694			395,772
Benefits and expenses:
Policyowner benefits		92,614		126,512		(130	)		218,996
Underwriting, acquisition, and other expenses		21,175		16,779		3,655			41,609
Amortization of DAC and VOBA, net of open block gain adjustment of $3,907		20,918		21,077		—			41,995
Dividends to policyowners		29,740		—		—			29,740
		164,447		164,368		3,525			332,340
Segment pre-tax operating income	$	33,843	$	29,420	$	169			63,432
Realized/unrealized gains (losses) on open block assets									16,374
Unrealized gains (losses) on open block options and trading investments									42,320
Change in option value of equity indexed products and market value adjustments on total return strategy annuities									(35,811	)
Cash flow hedge amortization									(1,065	)
Amortization of DAC and VOBA due to open block gains and losses									(3,907	)
Reinsurance adjustments									3,854
Restructuring costs									(12,670	)
Other income from non-insurance operations									226
Income from continuing operations									72,753
Interest (expense)									(7,575	)
Income tax (expense)									(22,002	)
Income from discontinued operations, net of tax									535
Net income								$	43,711

21

Operating Segment Income
($ in thousands)

	Six Months Ended June 30, 2004
	Protection			Accumulation					Total
	Products			Products		All Other			Consolidated
Revenues:
Insurance premiums	$	132,143		$	1,582	$	803		$	134,528
Product charges		77,099			26,747		—			103,846
Net investment income		162,444			342,481		3,261			508,186
Realized/unrealized gains (losses) on closed block investments		(3,643	)		—		—			(3,643	)
Other income		1,834			34,235		1,471			37,540
		369,877			405,045		5,535			780,457
Benefits and expenses:
Policyowner benefits		184,600			235,079		(158	)		419,521
Underwriting, acquisition, and other expenses		36,073			38,948		11,317			86,338
Amortization of DAC and VOBA, net of open block loss adjustment of $5,742		44,768			55,679		—			100,447
Dividends to policyowners		36,418			2		—			36,420
		301,859			329,708		11,159			642,726
Segment pre-tax operating income	$	68,018		$	75,337	$	(5,624	)		137,731
Realized/unrealized gains (losses) on open block assets										(33,581	)
Unrealized gains (losses) on open block options and trading investments										(7,411	)
Change in option value of equity indexed products and market value adjustments on total return strategy annuities										13,555
Cash flow hedge amortization										(813	)
Amortization of DAC and VOBA due to open block gains and losses										(5,742	)
Other income from non-insurance operations										1,161
Income from continuing operations										104,900
Interest (expense)										(16,334	)
Income tax (expense)										(10,050	)
Income from discontinued operations, net of tax										3,899
Cumulative effect of change in accounting, net of tax										(510	)
Net income									$	81,905

22

Operating Segment Income
($ in thousands)

	Six Months Ended June 30, 2003
	Protection		Accumulation					Total
	Products		Products		All Other			Consolidated
Revenues:
Insurance premiums	$	156,673	$	2,242	$	747		$	159,662
Product charges		76,142		19,392		—			95,534
Net investment income		164,452		337,856		4,512			506,820
Realized/unrealized gains (losses) on closed block investments		7,344		—		—			7,344
Other income		2,046		30,413		531			32,990
		406,657		389,903		5,790			802,350
Benefits and expenses:
Policyowner benefits		193,282		256,374		(110	)		449,546
Underwriting, acquisition, and other expenses		41,616		32,714		7,635			81,965
Amortization of DAC and VOBA, net of open block gain adjustment of $10,452		40,482		42,041		—			82,523
Dividends to policyowners		64,314		—		—			64,314
		339,694		331,129		7,525			678,348
Segment pre-tax operating income	$	66,963	$	58,774	$	(1,735	)		124,002
Realized/unrealized gains (losses) on open block assets									24,453
Unrealized gains (losses) on open block options and trading investments									35,027
Change in option value of equity indexed products and market value adjustments on total return strategy annuities									(27,209	)
Cash flow hedge amortization									(2,478	)
Amortization of DAC and VOBA due to open block gains and losses									(10,452	)
Reinsurance adjustments									3,854
Restructuring costs									(15,864	)
Other income from non-insurance operations									622
Income from continuing operations									131,955
Interest (expense)									(14,374	)
Income tax (expense)									(39,102	)
Income from discontinued operations, net of tax									1,022
Net income								$	79,501

23

Item 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

     Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) addresses the consolidated financial condition of AmerUs Group Co. as of June 30, 2004, compared with December 31, 2003, and our consolidated results of operations for the three months and six months ended June 30, 2004 and 2003. You should read the following analysis of our consolidated financial condition and results of operations in conjunction with our MD&A and audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2003, and Unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

NATURE OF OPERATIONS

     We are a holding company whose subsidiaries are primarily engaged in the business of marketing, underwriting and distributing a broad range of individual life, annuity and insurance deposit products to individuals and businesses in 50 states, the District of Columbia and the U.S. Virgin Islands. We have two reportable operating segments: protection products and accumulation products. The primary offerings of the protection products segment are interest-sensitive whole life, term life, universal life and equity indexed life insurance policies. The primary offerings of the accumulation products segment are individual fixed annuities (comprised of traditional fixed annuities and equity indexed annuities) and funding agreements.

FINANCIAL HIGHLIGHTS

     Our financial highlights are as follows:

	For The Three Months Ended June 30,					For The Six Months Ended June 30,
	2004			2003		2004			2003
	($ in thousands, except per share data)
Segment pre-tax operating income:
Protection Products	$	34,927		$	33,843	$	68,018		$	66,963
Accumulation Products		38,337			29,420		75,337			58,774
Other operations		(3,849	)		169		(5,624	)		(1,735	)
Total segment pre-tax operating income		69,415			63,432		137,731			124,002
Non-segment expense, net (A)		20,639			19,721		55,826			44,501
Net income	$	48,776		$	43,711	$	81,905		$	79,501
Diluted net income per share	$	1.20		$	1.11	$	2.02		$	2.02

	June 30,		December 31,
	2004		2003
Total assets	$	22,104,853	$	21,542,242
Stockholders’ equity	$	1,424,064	$	1,409,811

(A) Non-segment expense, net consists primarily of open block realized/unrealized gains and losses, derivative related market value adjustments, reinsurance adjustments, non-insurance operations, restructuring costs, interest expense, income taxes, discontinued operations and cumulative effect of change in accounting.

24

     Operating segment income increased for both the protection products and accumulation products segments in the 2004 periods, compared to the respective periods in 2003. Protection products earnings were primarily impacted by increased open block product margins and lower operating expenses in 2004. Our accumulation products pre-tax operating segment income increased primarily due to the continued shift in our business from traditional fixed annuities to higher margin equity indexed annuities and more assets under management.

      Net income increased in the 2004 periods compared to the respective 2003 periods primarily as a result of higher operating segment income, reductions in income tax accruals and deferred income tax asset valuation allowances, and the gain on the sale of our residential financing subsidiary. The increase was partially offset by realized and unrealized losses on assets.

     Total assets increased $563 million during the first six months of 2004 primarily as a result of net cash received from collected premiums and deposits, positive cash flows from operating activities and the utilization of securities lending and borrowing arrangements and dollar-roll repurchase investment transactions. Liabilities increased primarily due to policy reserves and policyowner funds which increased due to the higher volume of insurance in force. Stockholders’ equity increased $14 million for the first six months of 2004 primarily as a result year-to-date net income of $82 million. The net income added to equity was reduced by the change in unrealized gains on available-for-sale investments and treasury stock purchases which decreased equity $62 million and $9 million, respectively. The unrealized gains included in accumulated other comprehensive income are presented after related adjustments to DAC, VOBA, capitalized bonus interest, closed block policyowner dividend obligation, unearned revenue reserves and deferred income taxes.

PROTECTION PRODUCTS

     Our protection products segment primarily consists of interest-sensitive whole life, term life, universal life and equity indexed life insurance policies. These products are marketed on a national basis primarily through a Preferred Producer agency system, PPGA distribution system and IMOs. Included in protection products is the closed block of ALIC and the closed block of ILIC established when the companies reorganized from mutual companies to stock companies. When protection products are sold, we invest the premiums we receive in our investment portfolio and establish a liability representing our commitment to the policyowner. We manage investment spread by seeking to maximize the return on these invested assets, consistent with our asset/liability and credit quality needs. We enter into reinsurance arrangements in order to reduce the effects of mortality risk and the statutory capital strain from writing new business. All income statement line items are presented net of reinsurance amounts. Protection products in force totaled $98.9 billion at June 30, 2004 and $98.6 billion at December 31, 2003. Protection products in force is a performance measure utilized by investors, analysts and the Company to assess the Company’s position in the industry. A summary of our protection products segment operations follows:

25

	For The Three Months Ended June 30,					For The Six Months Ended June 30,
	2004			2003		2004			2003
	($ in thousands)
Revenues:
Insurance premiums	$	62,427		$	76,512	$	132,143		$	156,673
Product charges		41,640			39,804		77,099			76,142
Net investment income		81,186			80,706		162,444			164,452
Realized gains (losses) on closed block investments		(4,473	)		275		(3,643	)		7,344
Other income		928			993		1,834			2,046
Total revenues		181,708			198,290		369,877			406,657
Benefits and expenses:
Policyowner benefits (bonus interest amortization, net of open block gain/loss adjustment		91,205			92,614		184,600			193,282
Underwriting, acquisition and other expenses		19,115			21,175		36,073			41,616
Amortization of DAC and VOBA, net of open block gain/loss adjustment		25,527			20,918		44,768			40,482
Dividends to policyowners		10,934			29,740		36,418			64,314
Total benefits and expenses		146,781			164,447		301,859			339,694
Pre-tax operating income - Protection Products segment	$	34,927		$	33,843	$	68,018		$	66,963

     Pre-tax operating income from our protection products increased 3.2% in the second quarter of 2004 and 1.6% in the first six months of 2004 compared to the respective 2003 periods. The increase was primarily due to higher open block product margins and lower operating expenses. The increase was partially reduced by higher DAC and VOBA amortization. The key drivers of our protection products business include sales, persistency, net investment income, mortality and expenses.

     Sales. Sales are a key driver of our business as they are a leading indicator of future revenue trends to emerge in segment operating income. Sales are presented as annualized premium, which is in accordance with industry practice, and represent the amount of new business sold during the period. Sales are a performance metric which we use to measure the productivity of our distribution network and for compensation of sales and marketing employees and agents. The following table summarizes annualized premium by life insurance product:

			Sales Activity by Product
	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2004		2003		2004		2003
			($ in thousands)
Traditional life insurance:
Whole life	$	3	$	18	$	8	$	220
Interest-sensitive whole life		1,411		5,818		4,829		12,838
Term life		3,577		3,628		7,147		7,340
Universal life		9,235		9,438		16,769		16,378
Equity indexed life		19,291		11,750		36,594		25,227
Direct		33,517		30,652		65,347		62,003
Private label term life premiums		—		1,756		—		3,693
Total	$	33,517	$	32,408	$	65,347	$	65,696

     Direct first year annualized premiums increased 9.3% in the second quarter of 2004 and 5.4% on a year-to-date basis in 2004 compared to the respective 2003 periods. We continue to focus our marketing efforts on equity indexed life products. In the first six months of 2004, sales of equity indexed life products were $36.6 million as compared to $25.2 million for 2003 and comprised 56% of total direct sales in the first six months of 2004 compared to 41% in the first six months of 2003. We are a leading writer of equity indexed life products in the United States. Interest-sensitive whole life insurance sales decreased in both periods of 2004 compared to 2003 due to uncertainty in government tax policy and regulation.

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     Premiums and Product Charges. We recognize premiums on traditional life insurance policies as revenues when the premiums are due. Amounts received as payments for universal life and equity indexed life insurance policies are not recorded as premium revenue, but are instead recorded as a policyowner liability. Revenues from the universal life and equity indexed life policies consist of charges for the cost of insurance, policy administration and policy surrender and are included on the line item product charges. All revenue is reported net of reinsurance ceded.

     Insurance premium revenue was lower in the second quarter and first six months of 2004 as compared to the same periods in 2003 primarily due to lower sales of traditional products and the continued decline in closed block in force business. Product charge revenue was higher in the second quarter and first six months of 2004 as compared to the same periods in 2003 due to growth in the equity indexed life block of business which was partially offset by higher reinsurance premiums as we reinsure this block of business.

     Persistency. Persistency is a key driver of our business because it shows the policies which remain in our block of business and is measured by the lapse rate. A low lapse rate means higher persistency indicating more business is remaining in force to generate future revenues. Annualized lapse rates, based on a rolling four quarter period, were 6.3% in the first six months of 2004 and 2003. Our persistency experience remains within our pricing assumptions.

     Net Investment Income. Net investment income is a key driver of our business as it reflects earnings on our invested assets. Net investment income increased for the second quarter and decreased for the first six months of 2004 as compared to the same periods a year ago. The year-to-date earned rate of the investment portfolio was 6.42% compared to 6.84% a year ago. Lower yields primarily contributed to the decrease in net investment income as compared to a year ago. For the quarter, the decrease in yields was offset by the growth in protection products assets which increased approximately $252 million from 2003.

     Mortality and Benefit Expense. Mortality is a key driver of our business as it impacts the amount of our benefit expense. We utilize reinsurance to reduce the effects of mortality risk. Benefit expense was lower in the second quarter of 2004 and year-to-date 2004 as compared to the respective prior periods of 2003, due to the continued decline in closed block in force business.

     Underwriting, Acquisition and Other Expenses. Underwriting, acquisition and other expenses are a key driver of our business as they are costs of our operations. Expenses decreased for the second quarter and first six months of 2004 compared to the same periods of 2003 primarily due to lower operating expenses resulting from the restructuring activities that took place in 2003 and in prior years to integrate the ILICO life operations.

     Amortization of DAC and VOBA. The amortization of DAC and VOBA increased for the second quarter and first six months of 2004 as compared to the respective periods in 2003. DAC and VOBA are generally amortized in proportion to policy gross margins which increased in 2004, resulting in higher amortization expense.

     Dividends to Policyowners. In addition to basic policyowner dividends, dividend expense includes increases or decreases to the closed block policyowner dividend obligation liability carried on the consolidated balance sheet. The actual results of the closed block are adjusted to equal the expected earnings based on the actuarial calculation at the time of formation of the closed block (which we refer to as the closed block glide path). The adjustment to have the closed block operating results equal the closed block glide path is made to dividend expense. If the actual results for the period exceed the closed block glide path, increased dividend expense is recorded as a policyowner dividend obligation to reduce the actual closed block results. For actual results less than the closed block glide path, dividend expense is reduced to increase the actual closed block results. As a result of this accounting treatment, operating earnings only include the predetermined closed block glide path.

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     Dividend expense decreased for the second quarter and first six months of 2004 compared to the same periods of 2003. This reduction was primarily the result of realized losses on closed block investments in 2004 as compared to realized gains in 2003 and lower closed block net investment income for both periods. These reductions decreased closed block earnings.

     Outlook. We expect to continue to shift our sales to higher return products, in particular the equity indexed life products. We also expect to continue to realize operating efficiencies created by the restructuring of the protection products operations and centralization of our administrative functions.

ACCUMULATION PRODUCTS

     Our accumulation products segment primary offerings consist of individual fixed annuities and funding agreements. The fixed annuities are marketed on a national basis primarily through IMOs and independent brokers. Similar to our protection products segment, we invest the premiums we receive from accumulation product deposits in our investment portfolio and establish a liability representing our commitment to our policyowner. We manage investment spread by seeking to maximize the return on our invested assets consistent with our asset/liability management and credit quality needs. When appropriate, we periodically reset the interest rates credited to our policyowner liability. Accumulation products reserves totaled $11.9 billion at June 30, 2004 and $11.7 billion at December 31, 2003. A summary of our accumulation products segment operations follows:

	For The Three Months Ended June 30,				For The Six Months Ended June 30,
	2004		2003		2004		2003
	($ in thousands)
Revenues:
Immediate annuity and supplementary contract premiums	$	859	$	1,059	$	1,582	$	2,242
Product charges		12,644		8,899		26,747		19,392
Net investment income		168,218		168,183		342,481		337,856
Other income		2,626		2,780		5,377		5,855
Total revenues		184,347		180,921		376,187		365,345
Benefits and expenses:
Policyowner benefits		114,261		126,512		235,079		256,374
Underwriting, acquisition and other expenses		8,006		6,666		15,238		13,135
Amortization of DAC and VOBA		25,749		21,077		55,679		42,041
Dividends to policyowners		2		—		2		—
Total benefits and expenses		148,018		154,255		305,998		311,550
IMO Operations:
Other income		14,221		12,867		28,858		24,558
Other expenses		12,213		10,113		23,710		19,579
Net IMO operating income		2,008		2,754		5,148		4,979
Pre-tax operating income - Accumulation Products segment	$	38,337	$	29,420	$	75,337	$	58,774

     Pre-tax operating income from our accumulation products operations increased 30.3% in the second quarter of 2004 and 28.2% in the first six months of 2004 compared to the respective 2003 periods primarily due to higher assets under management and increased product spreads from our higher margin products. The drivers of profitability in our accumulation products business include deposits, persistency, product spread, expenses and IMO operations.

     Deposits. Deposits are a key driver of our business as this is a measure which represents collected premiums to be deposited to policyowner accounts for which we will earn a future product spread. Deposits are presented as collected premiums, which are measured in accordance with industry practice, and represent the amount of new business sold during the period. Deposits are a performance metric which we use to measure the productivity of our distribution network and for compensation of sales and marketing employees and agents. The following table summarizes our accumulation products segment deposits:

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				Deposits by Product
	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2004			2003			2004			2003
	($ in thousands)
Annuities
Deferred fixed annuities:
Traditional fixed annuities	$	78,577		$	101,200		$	160,747		$	243,862
Equity indexed annuities		348,482			367,255			645,357			600,445
Variable annuities		806			901			1,658			1,888
Total annuities		427,865			469,356			807,762			846,195
Funding agreements		85,000			—			85,000			—
Total		512,865			469,356			892,762			846,195
Reinsurance ceded		(3,871	)		(7,551	)		(7,067	)		(15,619	)
Total deposits, net of reinsurance	$	508,994		$	461,805		$	885,695		$	830,576

     Direct annuity deposits decreased 8.8% in the second quarter of 2004 and 4.5% year-to-date for 2004 compared to the respective periods of 2003. Deposits decreased in 2004 as compared to 2003 primarily due to lower traditional fixed annuity deposits caused by the low interest rate environment. We have shifted our product mix towards our higher returning equity indexed annuities. Equity indexed annuities comprised 80% of total direct annuity deposits in the first six months of 2004 compared to 71% in the first six months of 2003. Our wholly-owned and proprietary organizations accounted for approximately 77% of our annuity deposits in the first six months of 2004 compared to 75% in the first six months of 2003.

     Product Charges. The deposits we receive on accumulation products are not recorded as revenue but instead as a policyowner liability. Surrender charges collected on accumulation products are recorded as revenue and shown as a product charge. Product charges increased in the second quarter and first six months of 2004 as compared to the respective 2003 periods due to the growth in the business.

     Persistency. Persistency is a key driver of our business as it refers to the policies which remain in our block of business and is measured by a withdrawal rate. A low withdrawal rate means higher persistency indicating more business is remaining in force to generate future revenues. Withdrawals represent funds taken out of accumulation products by policyowners not including those due to the death of policyowners. Annuity withdrawal rates without internal replacements, based on a rolling four quarter period, increased in 2004 and amounted to 9.0% and 8.7% for the first six months of 2004 and 2003, respectively. Annuity withdrawals without internal replacements totaled $582.3 million and $652.9 million for the first six months of 2004 and 2003, respectively. Our withdrawal experience remained within our pricing assumptions. Withdrawal rates increased for the first six months of 2004 as compared to 2003 as prior year withdrawals were reduced as a result of the low interest rate environment.

     Product Spread. Product spread is a key driver of our business as it measures the difference between the income earned on our invested assets and the rate which we credit to policyowners, with the difference reflected as segment operating income. Asset earned rates and liability crediting rates, based on a rolling four quarter period, were as follows for accumulation segment products:

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	June 30,
	2004			2003
Asset earned rate		5.74	%		6.27	%
Liability credited rate		3.67	%		4.25	%
Product spread		2.07	%		2.02	%

     The product spread, based on a rolling four quarter period, increased five basis points to 207 basis points for the first six months of 2004 compared to the first six months of 2003. Liability crediting rates were lowered throughout 2003 and the first six months of 2004 to correspond with the decline in investment yields caused by lower rates on new and reinvested funds.

     At June 30, 2004, the account value of traditional annuities totaled $6.8 billion of which approximately 96% have minimum guarantee rates ranging from 3% to 4%. For traditional annuities with an account value of $5.0 billion, the credited rate was equal to the minimum guarantee rate, and as a result, the credited rate cannot be lowered. We also offer an interest rate crediting strategy that credits the policy with a return generally based upon the interest rates it earns on assets supporting the respective policies less management fees. Traditional annuities with an account value of $5.3 billion had a one-year interest guarantee period while annuities with an account value of $1.2 billion had a multi-year guarantee for which the credited rate cannot be decreased until the end of the multi-year period. At the end of the multi-year period, we will have the ability to lower the crediting rate to the minimum guaranteed rate by an average of approximately 275 basis points. The remaining multi-year period is generally either one or two years. Due to these limitations on the ability to lower interest crediting rates and the potential for additional credit defaults and lower reinvestment rates on investments, we could experience spread compression in future periods.

     Amortization of DAC and VOBA. The amortization of DAC and VOBA increased for the second quarter and first six months of 2004 compared to the respective periods in 2003. DAC and VOBA are generally amortized in proportion to policy gross margins which increased in 2004, resulting in higher amortization expense.

     IMO Operations. IMO Operations are a key driver of our business as the earnings from the IMOs are a significant component of the accumulation products segment operating income. IMOs have contractual arrangements to promote our insurance products to their networks of agents and brokers. Additionally, they also contract with third party insurance companies. We own five such IMOs. The income from IMO operations primarily represents annuity commissions received by our IMOs from those third party insurance companies. Net IMO operating income in 2004 remained consistent with 2003 levels.

     Outlook. We anticipate increased product sales from our IMOs but decreased product sales from other distribution channels as we manage our sales in this current low interest rate environment. We also expect to continue the shift of our product mix to higher return products, in particular the equity indexed annuity products. We will continue to manage our spreads as we strive for our desired profitability in this economic environment.

OTHER

     The other segment is our non-core lines of business outside of protection and accumulation products. These lines of business include holding company revenues and expenses, operations of our real estate management subsidiary, and accident and health insurance. The pre-tax operating loss in the first six months of 2004 increased compared to the same period of 2003 primarily due to increased holding company expenses related to compliance with Sarbanes-Oxley internal control regulations and lower investment income of our real estate management subsidiary.

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INCOME STATEMENT RECONCILIATION

     A reconciliation of our segment pre-tax operating income to net income as shown in our consolidated statements of income follows:

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2004			2003			2004			2003
	($ in thousands)
Segment pre-tax operating income:
Protection Products	$	34,927		$	33,843		$	68,018		$	66,963
Accumulation Products		38,337			29,420			75,337			58,774
Other operations		(3,849	)		169			(5,624	)		(1,735	)
Total segment pre-tax operating income		69,415			63,432			137,731			124,002
Non-segment items — increases (decreases) to income:
Realized and unrealized losses on assets and liabilities:
Realized/unrealized gains (losses) on open block assets		(8,851	)		16,374			(33,581	)		24,453
Unrealized gains (losses) on open block options and trading investments		(31,226	)		42,320			(7,411	)		35,027
Change in option value of equity indexed products and market value adjustments on total return strategy annuities		37,288			(35,811	)		13,555			(27,209	)
Cash flow hedge amortization		(351	)		(1,065	)		(813	)		(2,478	)
Amortization of DAC & VOBA due to open block realized gains and losses		(7,002	)		(3,907	)		(5,742	)		(10,452	)
Reinsurance adjustments		—			3,854			—			3,854
Restructuring costs		—			(12,670	)		—			(15,864	)
Other income from non-insurance operations		1,360			226			1,161			622
Income from continuing operations		60,633			72,753			104,900			131,955
Interest expense		(7,936	)		(7,575	)		(16,334	)		(14,374	)
Income tax expense		(3,921	)		(22,002	)		(10,050	)		(39,102	)
Net income from continuing operations		48,776			43,176			78,516			78,479
Income from discontinued operations, net of tax		—			535			3,899			1,022
Cumulative effect of change in accounting, net of tax		—			—			(510	)		—
Net income	$	48,776		$	43,711		$	81,905		$	79,501

     Realized and Unrealized Gains (Losses) on Assets and Liabilities. Realized gains (losses) on open block assets will fluctuate from period to period depending on the prevailing interest rate, the economic environment and the timing of investment sales and credit events. As part of managing our invested assets, we routinely sell securities and realize gains and losses. In addition, in the first quarter of 2004, we had a pre-tax impairment loss on our Indianapolis, Indiana office building of $12.2 million. We listed this office building with a real estate broker during the second quarter of 2003 as part of our restructuring plan and recorded a pre-tax impairment loss of $7.7 million at that time. As provided by SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” we determined in the first quarter of 2004 that the fair value of the building required further adjustment based on current offering prices for the property. The carrying value of the building that is held for sale is included in the other assets line item of the consolidated balance sheet and amounted to $3.3 million at June 30, 2004 and $15.5 million at December 31, 2003.

     Unrealized gains (losses) on open block options and trading investments also will fluctuate from period to period depending on the prevailing interest rate, the economic environment, the timing of investment sales and credit events. We use options to hedge our equity indexed products. In accounting for derivatives, we adjusted our options to market value, which, due to the economic environment and stock market conditions, resulted in an unrealized gain of $5.9 million and $12.1 million in the second quarter and first six months of 2004, respectively, and an unrealized gain of $25.0 million and $15.7 million in the second quarter and first six months of 2003, respectively. In addition, we also have trading securities that back our total return strategy traditional annuity products. The market value adjustment on the trading securities resulted in a loss of $37.1 million and $19.5 million in the second quarter and first

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six months of 2004, respectively, and a gain of $17.3 million and $19.4 million in the second quarter and first six months of 2003, respectively. Most of the unrealized gains and losses on the options and trading securities are offset by similar adjustments to the option portion of the equity indexed product reserves and to the total return strategy annuity reserves. The reserve adjustments are reflected in policyowner benefits expense in the consolidated statements of income and are included in the fair value change as decreased expense of $37.3 million and $13.6 million in the second quarter and first six months of 2004, respectively, and additional expense of $35.8 million and $27.2 million in the second quarter and first six months of 2003, respectively, explained in the following paragraph.

     The fair value change in options embedded within our equity indexed products and the fair value changes on our total return strategy fixed annuity contracts are being recorded at fair value. As previously discussed, these fair value changes are offset by similar adjustments to unrealized gains (losses) on investments related to the fair value changes on the options that hedge the equity indexed products and on the trading securities that back the total return strategy products. The reduction in such contract expense is less than the change in investment income primarily due to the inability to lower crediting rates below minimum guaranteed rates.

     Reinsurance Adjustments. Reinsurance related adjustments in the first six months of 2003 consist of the release of an $8.2 million liability in conjunction with the settlement and amendment of a reinsurance arrangement and a $4.3 million true-up of pre-2003 reinsurance settlements under a reinsurance arrangement between ILIC’s open block and closed block. Both of the reinsurance adjustments were recorded in the second quarter of 2003.

     Restructuring Costs. Restructuring costs relate to our consolidation of various functions in connection with a restructuring of our protection products and accumulation products operations and investment activities which began in the third quarter of 2001. The restructuring charges expensed in the first six months of 2003 included pre-tax severance and termination benefits of $0.8 million for severance accrual adjustments and other pre-tax costs of $15.0 million primarily related to the impairment loss on the Indianapolis office building, expenses associated with the merger of IL Annuity into ILICO and systems conversion costs. Charges for all restructuring activities were completed in 2003.

     Income Tax Expense. The effective income tax rate for the first six months of 2004 varied from the prevailing corporate rate primarily as a result of reductions in the income tax accrual and deferred tax asset valuation allowances. The accrual reductions, amounting to $5.2 million in the first quarter of 2004 and $2.7 million in the second quarter of 2004, were for the release of provisions originally established for potential tax adjustments which have been settled or eliminated. In addition, the deferred tax asset valuation allowance was reduced $10.4 million in the second quarter of 2004 as a result of the realization of capital loss carryforwards.

     Discontinued Operations. In November 2003, we entered into an agreement to sell our residential financing operations. The results of the residential financing operations have been classified as discontinued operations. The sale was completed in January 2004, resulting in an after-tax gain of $3.9 million.

     Change in Accounting. Effective January 1, 2004, the Company adopted SOP 03-1 resulting in the establishment of additional policy reserve liabilities for fees charged for insurance benefit features which are assessed in a manner that is expected to result in profits in earlier years and losses in subsequent years. The total effect of adopting SOP 03-1 (including reinsurance recoverables) as of January 1, 2004, amounted to a decrease of $0.8 million ($0.5 million after-tax) in net income which has been reflected as a cumulative effect of a change in accounting.

ACCOUNTING DEVELOPMENTS

     The Financial Accounting Standards Board’s Emerging Issues Task Force (EITF) has reached a tentative conclusion on EITF No. 04-8, “The Effect of Contingently Convertible Debt on Diluted Earnings Per Share,” that contingently convertible debt instruments are subject to the “if-converted” method for earnings per share calculations regardless of whether the instrument has met its contingent conversion features. If the EITF should become effective in its current form, our Optionally Convertible Equity-

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linked Accreting Notes would be subject to the new earnings per share guidance proposed by the EITF, and if the Company did not take action to mitigate the effect of the pronouncement, would result in more shares being outstanding in the diluted earnings per share calculation. We will continue to monitor the status of the EITF as the project is finalized.

LIQUIDITY AND CAPITAL RESOURCES

AmerUs Group Co.

     As a holding company, AmerUs Group Co.’s cash flows from operations consist of dividends from subsidiaries, if declared and paid, interest from income on loans and advances to subsidiaries (including a surplus note issued to us by ALIC), investment income on our assets and fees which we charge our subsidiaries, offset by the expenses incurred for debt service, salaries and other expenses.

     The payment of dividends by our insurance subsidiaries is regulated under various state laws. Generally, under the various state statutes, our insurance subsidiaries’ dividends may be paid only from the earned surplus arising from their respective businesses and must receive the prior approval of the respective state regulator to pay any dividend that would exceed certain statutory limitations. The current statutes generally limit any dividend, together with dividends paid out within the preceding 12 months, to the greater of (i) 10% of the respective company’s policyowners’ statutory surplus as of the preceding year end or (ii) the statutory net gain from operations for the previous calendar year. Generally, the various state laws give the state regulators discretion to approve or disapprove requests for dividends in excess of these limits. Based on these limitations and 2003 results, our life insurance subsidiaries could pay us an estimated $50 million in dividends in 2004 without obtaining regulatory approval. Our subsidiaries paid no dividends in the first six months of 2004. We also consider risk-based capital levels, capital and liquidity operating needs, and other factors prior to paying dividends from the insurance subsidiaries. We have a $200 million revolving credit facility with a syndicate of lenders (which we refer to as the Revolving Credit Agreement). As of June 30, 2004, there was no outstanding loan balance under the facility. The Revolving Credit Agreement provides for typical events of default and covenants with respect to the conduct of business and requires the maintenance of various financial levels and ratios. Among other covenants, we (a) cannot have a leverage ratio greater than 0.35:1.0, (b) cannot have an interest coverage ratio less than 2.50:1.0, (c) are prohibited from paying cash dividends on common stock in excess of an amount equal to 3% of consolidated net worth as of the last day of the preceding fiscal year, (d) must cause our insurance subsidiaries to maintain certain levels of risk-based capital, and (e) are prohibited from incurring additional indebtedness for borrowed money in excess of certain limits typical for such lines of credit. We closely monitor all of these covenants to ensure continued compliance.

     The Company has several options for deploying excess capital, including supporting higher sales growth, reducing debt levels, pursuing acquisitions and buying back common stock. Our Board of Directors approved a stock purchase program effective August 9, 2002, under which we may purchase up to three million shares of our common stock at such times and under such conditions, as we deem advisable. The purchases may be made in the open market or by such other means as we determine to be appropriate, including privately negotiated purchases. The purchase program supercedes all prior purchase programs. We plan to fund the purchase program from a combination of our internal sources, dividends from insurance subsidiaries and the Revolving Credit Agreement. Approximately 2.0 million shares remain available for repurchase under this program. There were 244,400 shares purchased in the first six months of 2004 for $9.2 million. Holding company cash was utilized to purchase the shares.

     We manage liquidity on a continuing basis. One way is to minimize our need for capital. We accomplish this by attempting to use our capital as efficiently as possible and by developing capital-efficient products in our insurance subsidiaries. We also manage our mix of sales by focusing on the more capital-efficient products. In addition, we use reinsurance agreements, where cost-effective, to reduce capital strain in the insurance subsidiaries. We also focus on

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optimizing the consolidated capital structure to properly balance the levels and sources of borrowing and the issuance of equity securities.

Insurance Subsidiaries

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

     Management believes that the current level of cash and available-for-sale, held for trading and short-term securities, combined with expected net cash inflows from operations, maturities of fixed maturity investments, principal payments on mortgage-backed securities and sales of its insurance products, will be adequate to meet the anticipated short-term cash obligations of the life insurance subsidiaries.

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

     We take into account asset/liability management considerations in the product development and design process. Contract terms for the interest-sensitive products include surrender and withdrawal provisions which mitigate the risk of losses due to early withdrawals. These provisions generally do one or more of the following: limit the amount of penalty-free withdrawals, limit the circumstances under which withdrawals are permitted, or assess a surrender charge or market value adjustment relating to the underlying assets.

     In addition to the interest-sensitive products, our insurance subsidiaries have issued funding agreements totaling $960 million outstanding as of June 30, 2004, consisting primarily in six to ten year fixed rate insurance contracts. The assets backing the funding agreements are legally segregated and are not subject to claims that arise out of any other business of the insurance subsidiaries. The funding agreements are further backed by the general account assets of the insurance subsidiaries. The segregated assets and liabilities are included with general account assets in the financial statements. The funding agreements may not be cancelled by the holders unless there is a default under the agreements, but the insurance subsidiaries may terminate the agreements at any time.

     We also have variable separate account assets and liabilities representing funds that are separately administered, principally for variable annuity contracts, and for which the contractholder bears the investment risk. Separate account assets and liabilities are reported at fair value and amounted to $255 million at June 30, 2004. Separate account contractholders have no claim against the assets of the general account. The operations of the separate accounts are not included in the accompanying consolidated financial statements.

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     Through their respective memberships in the Federal Home Loan Banks (FHLB) of Des Moines and Topeka, ALIC and American are eligible to borrow under variable-rate short term federal funds arrangements to provide additional liquidity. These borrowings are secured and interest is payable at the current rate at the time of each advance. There were no borrowings under these arrangements outstanding at June 30, 2004. In addition, ALIC has long-term fixed rate advances from FHLB outstanding of $12.9 million at June 30, 2004.

     The insurance subsidiaries may also obtain liquidity through sales of investments. The investment portfolio as of June 30, 2004 had a carrying value of $18.0 billion, including closed block investments.

     The level of capital in the insurance companies is regulated by risk-based capital formulas and is monitored by rating agencies. On June 21, 2004, Moody’s Investors Service changed its outlook to stable from negative for all of our insurance subsidiaries. In order to maintain appropriate capital levels, it may be necessary from time to time for AmerUs Group Co. to provide additional capital to the insurance companies.

     We participate in a securities lending program whereby certain fixed maturity securities from the investment portfolio are loaned to other institutions for a short period of time. We receive a fee in exchange for the loan of securities and require initial collateral equal to 102 percent of the market value of the loaned securities to be separately maintained. Securities with a market value of approximately $324.8 million and $154.6 million were on loan under the program and we were liable for cash collateral under our control of approximately $332.5 million and $158.8 million at June 30, 2004 and December 31, 2003, respectively. The collateral held under the securities lending program has been included in cash and cash equivalents in the consolidated balance sheet and the obligation to return the collateral upon the return of the loaned securities has been included in accrued expenses and other liabilities.

     We may also enter into securities borrowing arrangements from time to time whereby we borrow securities from other institutions and pay a fee. Securities borrowed amounted to $133 million and none at June 30, 2004, and December 31, 2003, respectively, and are also included in accrued expenses and other liabilities in the consolidated balance sheet.

     At June 30, 2004, the statutory surplus of the insurance subsidiaries was approximately $836 million. Management believes that each life insurance company has statutory capital which provides adequate risk based capital that exceeds required levels.

     In the future, in addition to cash flows from operations and borrowing capacity, the insurance subsidiaries may obtain their required capital from AmerUs Group Co.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

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

     Interest rate risk is the price sensitivity of a fixed income security to changes in interest rates. Management views these potential changes in price within the overall context of asset and liability management. Actuarial

35

professionals estimate the payout pattern of our liabilities, primarily lapses, to determine duration, which is the present value of the fixed income investment portfolios after consideration of the duration of these liabilities and other factors, which management believes mitigates the overall effect of interest rate risk.

     For variable and equity indexed products, profitability on the portion of the policyowner’s account balance invested in the fixed general account option, if any, is also affected by the spreads between interest yields on investments and rates credited to the policies. For the variable products, the policyowner assumes essentially all the investment earnings risk for the portion of the account balance invested in the separate accounts. For the equity indexed products, we purchase primarily call options that are designed to match the return owed to contract holders who elect to participate in one or more market indices. Profitability on the portion of the equity indexed products tied to market indices is significantly impacted by the spread on interest earned on investments and the sum of (1) the cost of underlying call options purchased to match the returns owed to contract holders and (2) the minimum interest guarantees owed to the contract holder, if any. Profitability on the equity indexed products is also impacted by changes in the fair value of the embedded option which provides the contract holder the right to participate in market index returns after the next anniversary date of the contract. This impacts profitability as we only purchase one-year call options to fund the returns owed to the contract holders at the inception of each contract year. This practice matches with the contract holders’ rights to switch to different indices on each anniversary date. The value of the forward starting options embedded in the equity indexed products can fluctuate with changes in assumptions as to future volatility of the market indices, risk free interest rates, market returns and the lives of the contracts.

     The following table provides information about our fixed maturity investments and mortgage loans for both our trading and other than trading portfolios at June 30, 2004. The table presents amortized cost and related weighted average interest rates by expected maturity dates. The amortized cost approximates the cash flows of principal amounts in each of the periods. The cash flows are based on the earlier of the call date or the maturity date or, for mortgage-backed securities, expected payment patterns. Actual cash flows could differ from the expected amounts.

	Expected Cash Flows
	6 months																					Expected
	2004			2005			2006			2007			2008			2009			Thereafter			Cash Flows		Fair Value
	($ in millions)
Fixed maturity securities available-for-sale	$	530		$	1,059		$	911		$	1,068		$	1,169		$	917		$	8,623		$	14,277	$	14,428
Average interest rate		6.1	%		6.0	%		6.8	%		7.7	%		5.5	%		5.5	%		5.7	%
Fixed maturity securities held for trading purposes	$	61		$	199		$	188		$	191		$	278		$	198		$	734		$	1,849	$	1,849
Average interest rate		4.3	%		2.9	%		2.9	%		4.3	%		3.3	%		2.9	%		4.4	%
Mortgage loans	$	30		$	62		$	59		$	55		$	67		$	63		$	508		$	844	$	874
Average interest rate		7.5	%		7.6	%		7.6	%		7.5	%		7.5	%		7.5	%		7.3	%
Total	$	621		$	1,320		$	1,158		$	1,314		$	1,514		$	1,178		$	9,865		$	16,970	$	17,151

     In accordance with our strategy of minimizing credit quality risk, we consistently invest in high quality marketable securities. Fixed maturity securities are comprised of U.S. Treasury, government agency, mortgage-backed and corporate securities. Approximately 62% of our fixed maturity securities are issued by the U.S. Treasury or U.S. government agencies or are rated A or better by Moody’s, Standard and Poor’s, or the NAIC. Less than 7.7% of the bond portfolio is below investment grade. Fixed maturity securities have an average life of approximately 8.13 years.

     Prepayment risk refers to the changes in prepayment patterns that can either shorten or lengthen the expected timing of the principal repayments and thus the average life and the effective yield of a security. Such risk exists primarily within the portfolio of mortgage-backed securities. Management monitors such risk regularly. We invest primarily in those classes of mortgage-backed securities that have average or lower prepayment risk.

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     Our use of derivatives is generally limited to hedging purposes and has principally consisted of using interest rate swaps and options. These instruments, viewed separately, subject us to varying degrees of market and credit risk. However when used for hedging, the expectation is that these instruments would reduce overall market risk. Credit risk arises from the possibility that counterparties may fail to perform under the terms of the contracts.

     Equity price risk is the potential loss arising from changes in the value of equity securities. In general, equities have more year-to-year price variability than intermediate term grade bonds. However, returns over longer time frames have been consistently higher.

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

Item 4. Controls and Procedures

(a) Based upon their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, are effective for recording, processing, summarizing and reporting the information we are required to disclose in our reports filed under such act.

(b) There was no change in our internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

     In recent years, the life insurance industry, including the Company and its subsidiaries, have been subject to an increase in litigation pursued on behalf of purported classes of insurance purchasers, questioning the conduct of insurers in the marketing of their products. The Company is routinely involved in litigation and other proceedings, including class actions (such as pending class action lawsuits related to the use of purportedly inappropriate sales techniques and products for the senior market), reinsurance claims and regulatory proceedings arising in the ordinary course of its business. Some of these claims and legal actions are in jurisdictions where juries are given substantial latitude in assessing damages, including punitive and exemplary damages. In addition, regulatory bodies, such as state insurance departments and attorneys general, periodically make inquiries and conduct examinations concerning our compliance with insurance and other laws. We respond to such inquiries and cooperate with regulatory examinations in the ordinary course of business.

     Our litigation is subject to many uncertainties, and given its complexity and scope, the outcomes cannot be predicted. It is possible that our results of operations or cash flow in a particular quarterly or annual period could be materially affected by an ultimate unfavorable resolution of pending litigation and regulatory matters depending, in part, upon the results of operations or cash flow for such period. Management believes, however, that the ultimate outcome of all pending litigation and regulatory matters, after consideration of applicable reserves, should not have a material adverse effect on our financial position.

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

     The following table sets forth information regarding purchases of equity securities for the six months ended June 30, 2004:

						(c) Total number		(d) Maximum number
						of shares (or		(or approximate dollar
	(a) Total			(b) Average		units) purchased		value) of shares
	number of			price paid		as part of publicly		(or units) that may
	shares (or units)			per share		announced plans		yet be purchased under
Period	purchased (1)			(or units)		or programs		the plans or programs (2)
01/01/2004-01/31/2004		—		$	—		—		2,271,900
02/01/2004-02/29/2004		—			—		—		2,271,900
03/01/2004-03/31/2004		—			—		—		2,271,900
04/01/2004-04/30/2004		—			—		—		2,271,900
05/01/2004-05/31/2004		244,400	(2)		37.45		244,400		2,027,500
06/01/2004-06/30/2004		—			—		—		2,027,500
Total		244,400		$	37.45		244,400

(1)	Does not include shares withheld from employee stock awards to satisfy applicable tax withholding obligations.
(2)	In August 2002, our board of directors authorized a repurchase program of up to 3 million shares of our outstanding common stock. There is no expiration date for this program.

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Item 4. Submission of Matters to a Vote of Security Holders

     At the annual meeting of the Company’s shareholders on May 13, 2004, the Company’s shareholders approved (1) the reelection of Roger K. Brooks, Thomas C. Godlasky, Stephen Strome, and F.A. Wittern, Jr.; (2) the amendment of the Company’s articles of incorporation; (3) the issuance of shares in connection with the Company’s management incentive plan; and (4) the ratification of the appointment by the Board of Directors of the Company of Ernst & Young LLP as the Company’s independent auditors. The result of the vote is as follows:

     Election of Roger K. Brooks

For:	25,772,051
Withheld:	899,675

     Election of Thomas C. Godlasky

For:	26,251,455
Withheld:	420,271

     Election of Stephen Strome

For:	26,380,453
Withheld:	291,273

     Election of F.A. Wittern

For:	26,369,453
Withheld:	302,273

     Amend the Company’s Articles of Incorporation

For:	24,820,151
Against:	1,409,436
Abstaining:	442,139

     Issue Shares in Conjunction with the Company’s Management Incentive Plan

For:	19,566,467
Against:	3,996,192
Abstaining:	440,647

     Ratification of Ernst & Young LLP

For:	26,055,559
Against:	429,574
Abstaining:	186,593

     The term of the following other directors of the Company continued after the meeting: David A. Arledge; Alecia A. DeCoudreaux; Thomas F. Gaffney; John W. Norris, Jr.; Andrew J. Paine, Jr.; Jack C. Pester; and John A. Wing.

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Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

    A list of exhibits included as part of this report is set forth in the Exhibit Index which immediately precedes such exhibits and is hereby incorporated by reference herein.

(b)	The following reports on Form 8-K were filed during the quarter ended June 30, 2004:
	Form 8-K dated May 4, 2004 announcing the release of first quarter 2004 earnings and furnishing supplemental financial information of AmerUs Group Co.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DATED:	August 6, 2004	AMERUS GROUP CO.
		By	/s/ Melinda S. Urion
			Melinda S. Urion
			Executive Vice President,
			Chief Financial Officer and Treasurer
			(Principal Financial Officer)
		By	/s/ Brenda J. Cushing
			Brenda J. Cushing
			Senior Vice President and Controller
			(Principal Accounting Officer)

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AMERUS GROUP CO. AND SUBSIDIARIES

INDEX TO EXHIBITS

Exhibit
No.	Description
2.1	Combination and Investment Agreement, dated February 18, 2000, among American Mutual Holding Company, AmerUs Life Holdings, Inc., Indianapolis Life Insurance Company and The Indianapolis Life Group of Companies, Inc., filed as Exhibit 2.1 to AmerUs Life Holdings, Inc.’s report on Form 8-K/A on March 6, 2000, is hereby incorporated by reference.
2.2	Purchase Agreement, dated as of February 18, 2000, by and between American Mutual Holding Company and AmerUs Life Holdings, Inc., filed as Exhibit 2.5 on Form 10-K, dated March 8, 2000, is hereby incorporated by reference.
2.3	Agreement and Plan of Merger, dated December 17, 1999, by and between American Mutual Holding Company and AmerUs Life Holdings, Inc., filed as Exhibit 2.6 on Form 10-K, dated March 8, 2000, is hereby incorporated by reference.
2.4	Amendment No. 1 to Agreement and Plan of Merger, dated February 18, 2000, by and between American Mutual Holding Company and AmerUs Life Holdings, Inc., filed as Exhibit 2.7 on Form 10-K, dated March 8, 2000, is hereby incorporated by reference.
2.5	Letter Agreement, dated December 17, 1999, by and between American Mutual Holding Company and AmerUs Life Holdings, Inc., filed as Exhibit 2.8 on Form 10-K, dated March 8, 2000, is hereby incorporated by reference.
2.6	Notification Agreement, dated as of February 18, 2000, by and among American Mutual Holding Company, AmerUs Life Holdings, Inc. and Bankers Trust Company, filed as Exhibit 2.9 on Form 10-K, dated March 8, 2000, is hereby incorporated by reference.
2.7	Amendment No. 2 to Agreement and Plan of Merger, dated April 3, 2000, by and between American Mutual Holding Company and AmerUs Life Holdings, Inc., filed as Exhibit 2.10 on Form 10-Q, dated May 15, 2000, is hereby incorporated by reference.
2.8	Amendment No. 1 to the Purchase Agreement, dated April 3, 2000, by and between American Mutual Holding Company and AmerUs Life Holdings, Inc., filed as Exhibit 2.11 on Form 10-Q, dated May 15, 2000, is hereby incorporated by reference.
2.9	Amendment to Combination and Investment Agreement dated February 18, 2000 among American Mutual Holding Company, AmerUs Life Holdings, Inc., Indianapolis Life Insurance Company and The Indianapolis Life Group of Companies, Inc., dated September 18, 2000, filed as Exhibit 2.2 to Form 8-K12G3 of the Registrant dated September 21, 2000, is hereby incorporated by reference.
2.10	Stock Purchase Agreement, dated January 1, 2002, by and among AmerUs Annuity Group Co., and the Stockholders of Family First Advanced Estate Planning and Family First Insurance Services, filed as Exhibit 2.13 on Form 10-Q dated August 12, 2002, is hereby incorporated by reference.
3.1*	Amended and Restated Articles of Incorporation of the Registrant dated May 21, 2004.
3.2*	Amended and Restated Bylaws of the Registrant dated May 21, 2004.
4.1	Amended and Restated Trust Agreement dated as of February 3, 1997 among AmerUs Life Holdings, Inc., Wilmington Trust Company, as property trustee, and the administrative trustees named therein (AmerUs Capital I business trust), filed as Exhibit 3.6 to the registration statement of AmerUs Life Holdings, Inc. and AmerUs Capital I on Form S-1, Registration Number 333-13713, is hereby incorporated by reference.
4.2	Indenture dated as of February 3, 1997 between AmerUs Life Holdings, Inc. and Wilmington Trust Company relating to the Company’s 8.85% Junior Subordinated Debentures, Series A, filed as Exhibit 4.1 to the registration statement of AmerUs Life Holdings, Inc. and AmerUs Capital I on Form S-1, Registration Number, 333-13713, is hereby incorporated by reference.
4.3	Guaranty Agreement dated as of February 3, 1997 between AmerUs Life Holdings, Inc., as guarantor, and Wilmington Trust Company, as trustee, relating to the 8.85% Capital Securities, Series A, issued by AmerUs Capital I, filed as Exhibit 4.4 to the registration statement on Form S-1, Registration Number, 333-13713, is hereby incorporated by reference.
4.4	Certificate of Trust of AmerUs Capital III filed as Exhibit 4.7 to the registration statement of AmerUs Life Holdings, Inc., AmerUs Capital II and AmerUs Capital III, on Form S-3 (No.

42

Exhibit
No.	Description
	333-50249), is hereby incorporated by reference.
4.5	Senior Indenture, dated as of June 16, 1998, by and between AmerUs Life Holdings, Inc. and First Union National Bank, as Indenture Trustee, relating to the AmerUs Life Holdings, Inc.’s 6.95% Senior Notes, filed as Exhibit 4.14 on Form 10-Q, dated August 13, 1998, is hereby incorporated by reference.
4.6	Subordinated Indenture, dated as of July 27, 1998, by and between AmerUs Life Holdings, Inc. and First Union National Bank, as Indenture Trustee, relating to AmerUs Life Holdings, Inc.’s 6.86% Junior Subordinated Deferrable Interest Debentures, filed as Exhibit 4.15 on Form 10-Q, dated August 13, 1998, is hereby incorporated by reference.
4.7	First Supplement to Indenture dated February 3, 1997 among American Mutual Holding Company, AmerUs Life Holdings, Inc. and Wilmington Trust Company as Trustee, relating to the Company’s 8.85% Junior Subordinated Debentures, Series A, dated September 20, 2000, filed as Exhibit 4.14 on Form 10-Q dated November 14, 2000, is hereby incorporated by reference.
4.8	Assignment and Assumption Agreement to Amended and Restated Trust Agreement, dated February 3, 1997 between American Mutual Holding Company and AmerUs Life Holdings, Inc., dated September 20, 2000, filed as Exhibit 4.15 on Form 10-Q dated November 14, 2000, is hereby incorporated by reference.
4.9	Assignment and Assumption to Guaranty Agreement, dated February 3, 1997 between American Mutual Holding Company and AmerUs Life Holdings, Inc., dated September 20, 2000, filed as Exhibit 4.16 on Form 10-Q, dated November 14, 2000, is hereby incorporated by reference.
4.10	First Supplement to Senior Indenture dated June 16, 1998, relating to AmerUs Life Holdings, Inc.’s 6.95% Senior Notes, among American Mutual Holding Company, AmerUs Life Holdings, Inc. and First Union National Bank, as Trustee, dated September 20, 2000, filed as Exhibit 4.23 on Form 10-Q, dated November 14, 2000, is hereby incorporated by reference.
4.11	Indenture dated as of March 6, 2002 between AmerUs Group Co. and BNY Midwest Trust Company, as Trustee, filed as Exhibit 4.1 on form 8-K/A, dated February 28, 2002, is hereby incorporated by reference.
4.12	Form of Purchase Contract Agreement between AmerUs Group Co. and Wachovia Bank, National Association (formerly known as First Union National Bank), as Purchase Contract Agent, filed as Exhibit 4.1 on Form 8-A12B, dated May 22, 2003, is hereby incorporated by reference.
4.13	Form of Pledge Agreement among AmerUs Group Co., BNY Midwest Trust Company, as Collateral Agent, Custodial Agent and Securities Intermediary and Wachovia Bank, National Association (formerly known as First union National Bank), as Purchase Contract Agent, filed as Exhibit 4.2 on Form 8-A12B dated May 22, 2003, is hereby incorporated by reference.
4.14	Form of Remarketing Agreement among AmerUs Group Co., Wachovia Bank, National Association (formerly known as First Union National Bank), as Purchase Contract Agent, and the Remarketing Agent named therein, filed as Exhibit 4.3 on Form 8-A12B dated May 22, 2003, is hereby incorporated by reference.
4.15	Form of Income PRIDES (included in Exhibit 4.1 as Exhibit A thereto), filed as Exhibit 4.1 on Form 8-A12B, dated May 22, 2003, is hereby incorporated by reference.
4.16	Officer’s Certificate attaching form of Senior Notes initially due 2008, filed as Exhibit 4.7 on Form 8-A12B, dated May 22, 2003, is hereby incorporated by reference.
10.1*	Amended and Restated Retirement Agreement, dated August 22, 2003, by and between Victor N. Daley and AmerUs Group Co.
11*	Statement Re: Computation of Earnings Per Share.
12*	Computation of Ratios of Earnings to Fixed Charges.
31.1*	Certification of Chief Executive Officer of Periodic Report Pursuant to Rule 13a-15(e) or Rule 15d-15(e).
31.2*	Certification of Chief Financial Officer of Periodic Report Pursuant to Rule 13a-15(e) or Rule 15d-15(e).
32.1*	Certification of Chief Executive Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350.
32.2*	Certification of Chief Financial Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350.

* Included herein

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EX-3.1

Exhibit 3.1

ARTICLES OF AMENDMENT
TO THE
AMENDED AND RESTATED ARTICLES INCORPORATION
OF
AMERUS GROUP CO.

To the Secretary of State of the State of Iowa:

     Pursuant to the provisions of Section 490 of the Iowa Business Corporation Act, the corporation hereafter named (“Corporation”) does hereby adopt the following Articles of Amendment to its Amended and Restated Articles of Incorporation:

I.	The name of the corporation is AmerUs Group Co. The effective date of its incorporation was the 30th day of June 1996. Its original name was American Mutual Holding Company.
II.	The date of adoption of the Articles of Amendment by the shareholders of the Corporation was May 13, 2004.
III.	The Articles of Amendment were duly approved by the shareholders of the Corporation in the manner required by Section 490.1003 of The Iowa Business Corporation Act and the Amended and Restated Articles of Incorporation.
IV.	The shareholders of the corporation approved on May 13, 2004, a proposal that Articles VIII and IX of the Amended and Restated Articles of Incorporation be deleted in their entirety and replaced them with the following Articles VIII and IX:

ARTICLE VIII
INDEMNIFICATION

The Corporation shall indemnify a director for liability (as such term is defined in section 490.850(5) of the Iowa Business Corporation Act) for any action taken, or any failure to take any action, as a director, except liability for any of the following: (1) receipt of a financial benefit by a director to which the director is not entitled; (2) an intentional infliction of harm on the Corporation or the shareholders; (3) a violation of section 490.833 of the Iowa Business Corporation Act; or (4) an intentional violation of criminal law. Without limiting the foregoing, the Corporation shall exercise all of its permissive powers as often as

Page 1

necessary to indemnify and advance expenses to its directors and officers to the fullest extent permitted by law. If the Iowa Business Corporation Act is hereafter amended to authorize broader indemnification, then the indemnification obligations of the Corporation shall be deemed amended automatically and without any further action to require indemnification and advancement of funds to pay for or reimburse expenses of its directors and officers to the fullest extent permitted by law. Any repeal or modification of this Article shall be prospective only and shall not adversely affect any indemnification obligations of the Corporation with respect to any state of facts existing at or prior to the time of such repeal or modification.

ARTICLE IX
DIRECTORS NOT PERSONALLY LIABLE

A director of the Corporation shall not be personally liable to the Corporation or its shareholders for money damages for any action taken, or any failure to take any action, as a director, except liability for any of the following: (1) the amount of a financial benefit received by a director to which the director is not entitled; (2) an intentional infliction of harm on the Corporation or the shareholders; (3) a violation of section 490.833 of the Iowa Business Corporation Act; or (4) an intentional violation of criminal law. If the Iowa Business Corporation Act is hereafter amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be eliminated or limited to the extent of such amendment, automatically and without any further action, to the fullest extent permitted by law. Any repeal or modification of this Article shall be prospective only and shall not adversely affect any limitation on the personal liability or any other right or protection of a director of the Corporation with respect to any state of facts existing at or prior to the time of such repeal or modification.

V. The effective time and date of this Articles of Amendment shall be the time and date of filing these Articles of Amendment by the Secretary of State of the State of Iowa.

Page 2

IN WITNESS WHEREOF, AmerUs Group Co. has caused these Articles of Amendment to be signed by Roger K. Brooks, its Chairman and Chief Executive Officer and James A. Smallenberger, its Secretary, this 20th day of May, 2004.

AMERUS GROUP CO.
By:	/s/ Roger K. Brooks
	ROGER K. BROOKS
	Chairman and Chief Executive Officer

By:	/s/ James A. Smallenberger
	JAMES A. SMALLENBERGER
	Secretary

STATE OF IOWA	}
	}	ss:
COUNTY OF POLK	}

     On this 20th day of May, 2004, before me Nelda L. Davis, a Notary Public in and for said County, personally appeared ROGER K. BROOKS and JAMES A. SMALLENBERGER, to me personally known who being by me duly sworn, did say that they are the Chairman and Chief Executive Officer and the Secretary respectively of AmerUs Group Co., and that said Articles of Amendment were signed and sealed on behalf of AmerUs Group Co. by authority of its Board of Directors and that the said ROGER K. BROOKS and JAMES A. SMALLENBERGER acknowledged the execution of said instrument to be the voluntary act and deed of said corporation by it voluntarily executed.

/s/ Nelda L. Davis  

Notary Public in and for the State of Iowa 

Page 3

EX-3.2

EXHIBIT 3.2

AMENDED AND RESTATED
BYLAWS
OF
AMERUS GROUP CO.

ARTICLE I

PRINCIPAL OFFICE

Section 1.1. The location of the principal office of AmerUs Group Co. (the “Corporation”) in the State of Iowa will be identified in the Corporation’s annual report filed with the Iowa Secretary of State. The Corporation may have such other offices either within or without the State of Iowa as the business of the Corporation may from time to time require.

ARTICLE II

REGISTERED OFFICE AND AGENT

Section 2.1. The registered agent or registered office, or both, may be changed by resolution of the Board of Directors.

ARTICLE III

MEETINGS OF SHAREHOLDERS

Section 3.1. Annual Meeting.

The annual meeting of the shareholders for the election of directors and for the transaction of such other business as may properly come before the meeting, shall be held on such date and at such time as may be fixed from time to time by the Board of Directors or if no date and time are so fixed, at 2:00 p.m. on the second Thursday in May of each year at such place as the Board of Directors shall each year fix. The date of the annual meeting of shareholders shall in all events be within the earlier of the first six (6) months after the end of the Corporation’s fiscal year or fifteen (15) months after the shareholders’ last annual meeting.

Section 3.2. Special Meetings.

Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by law (which for purposes of these bylaws shall mean as required from time to time by the Iowa Business Corporation Act (the “IBCA”) or the Amended and Restated Articles of Incorporation of the Corporation) (“Articles of Incorporation”), may be called by the Chairman of the Board or the Board of Directors, and shall be called by the Board of Directors upon the written demand, signed, dated and delivered to the Secretary, of the holders of at least ten percent (10%) of all the votes entitled to be cast on any issue proposed to be considered at the meeting. Such written demand shall state the purpose or purposes for which such meeting is to be called. The time, date and place of any special meeting shall be determined by the Board of Directors. Unless

otherwise provided in the Articles of Incorporation, a written demand for a special meeting may be revoked by a writing to that effect received by the Corporation prior to the receipt by the Corporation of demands sufficient in number to require the holding of a special meeting.

Section 3.3. Notices and Reports to Shareholders.

(a) Notice of the place, date and time of all meetings of shareholders and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be communicated not fewer than ten (10) days nor more than sixty (60) days before the date of the meeting to each shareholder entitled to vote at such meeting. The Board of Directors may establish a record date for the determination of shareholders entitled to notice, as provided in Section 3.5 of these bylaws. Notice of adjourned meetings need only be given if required by law or Section 3.7 of these bylaws.

(b) In the event corporate action is taken without a meeting in accordance with the IBCA by less than unanimous written consent, prompt notice of the taking of such corporate action shall be given to those shareholders who have not consented in writing.

(c) If notice of proposed corporate action is required by law to be given to shareholders not entitled to vote and the action is to be taken by consent of the voting shareholders, the Corporation shall give all shareholders notice of the proposed action at least ten (10) days before the action is taken. The notice must contain or be accompanied by the same material that would have been required to be sent to shareholders not entitled to vote in a notice of meeting at which the proposed action would have been submitted to the shareholders for action.

(d) Notice may be communicated in person, by mail, or other method of delivery, or by telephone, voice mail, or other electronic means. If these forms of personal notice are impracticable, notice may be communicated by a newspaper of general circulation in the area where published; or by radio, television, or other form of public broadcast communication. Written notice by the Corporation to its shareholders, if in a comprehensible form, is effective according to one of the following: (i) upon deposit in the United States mail, if mailed post-paid and correctly addressed to the shareholder’s address shown in the Corporation’s current record of shareholders; or (ii) when electronically transmitted to the shareholder in a manner authorized by the shareholder.

(e) Notice to a shareholder shall not be required to be given if either of the following applies: (i) notice of two consecutive annual meetings, and all notices of meetings during the period between such two consecutive annual meetings, have been sent to the shareholder at such shareholder’s address as shown on the records of the Corporation and have been returned undeliverable; or (ii) all, but not less than two, payments of dividends on securities during a twelve month period, or two consecutive payments of dividends on securities during a period of more than twelve months, have been sent to the shareholder at such shareholder’s address as shown on the records of the Corporation and have been returned undeliverable. If any

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such shareholder shall deliver to the Corporation a written notice setting forth such shareholder’s then-current address, the requirement that notice be given to such shareholder shall be reinstated.

Section 3.4. Waiver of Notice.

(a) Any shareholder may waive any notice required by law or these bylaws if in writing and signed by any shareholder entitled to such notice, whether before or after the date and time stated in such notice. Such a waiver shall be equivalent to notice to such shareholder in due time as required by law or these bylaws. Any such waiver shall be delivered to the Corporation for inclusion in the minutes or filing with the corporate records.

(b) A shareholder’s attendance at a meeting, in person or by proxy, waives (i) objection to lack of notice or defective notice of such meeting, unless the shareholder at the beginning of the meeting or promptly upon the shareholder’s arrival objects to holding the meeting or transacting business at the meeting, and (ii) objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.

Section 3.5. Record Date.

The Board of Directors may fix, in advance, a date as the record date for any determination of shareholders for any purpose, such date in every case to be not more than seventy (70) days prior to the date on which the particular action or meeting requiring such determination of shareholders is to be taken or held. If no record date is so fixed for the determination of shareholders, the close of business on the day before the date on which the first notice of a shareholders’ meeting is communicated to shareholders or the date on which the Board of Directors authorizes a share dividend or a distribution (other than one involving a repurchase or reacquisition of shares), as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof, unless the adjourned meeting is scheduled to be reconvened on a date which is more than 120 days after the date fixed for the original meeting or unless the Board of Directors selects a new record date or unless a new record date is required by law.

Section 3.6. Shareholders’ List.

After fixing a record date for a meeting, the Corporation shall prepare an alphabetical list of the names of all shareholders who are entitled to notice of a shareholders’ meeting. The list must be arranged by voting group and within each voting group by class or series of shares, and show the address of and number of shares held by each shareholder. The shareholders’ list must be available for inspection by any shareholder beginning two (2) business days after notice of the meeting is given for which the list was prepared and continuing through the meeting, at the Corporation’s principal office or at a place identified in the meeting notice in the city where the meeting will be held. A shareholder, or a shareholder’s agent or attorney, is entitled on written demand to inspect and, subject to the requirements of law, to copy the list, during regular

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business hours and at such person’s expense, during the period it is available for inspection. The Corporation shall make the shareholders’ list available at the meeting, and any shareholder, or a shareholder’s agent or attorney, is entitled to inspect the list at any time during the meeting or any adjournment.

Section 3.7. Quorum.

(a) At any meeting of the shareholders, a majority of the votes entitled to be cast on the matter by a voting group constitutes a quorum of that voting group for action on that matter, unless the representation of a different number is required by law or the Articles of Incorporation, and in that case, the representation of the number so required shall constitute a quorum. If a quorum shall fail to attend any meeting, the chairperson of the meeting or a majority of the votes present may adjourn the meeting to another place, date or time.

(b) When a meeting is adjourned to another place, date or time, notice need not be given of the adjourned meeting if the place, date and time thereof are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than one hundred twenty (120) days after the date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, notice of the place, date and time of the adjourned meeting shall be given in conformity with these bylaws. At any adjourned meeting, any business may be transacted which might have been transacted at the original meeting.

(c) Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment thereof unless a new record date is or must be set for that adjourned meeting.

Section 3.8. Organization.

(a) The Chairman of the Board, or in the absence of the Chairman, such person as the Board of Directors may have designated, or, in the absence of such a person, such person as shall be designated by the holders of a majority of the votes present at the meeting, shall call meetings of the shareholders to order and shall act as presiding officer of such meetings.

(b) The Secretary of the Corporation shall act as secretary at all meetings of the shareholders, but in the absence of the Secretary at any meeting of the shareholders, the presiding officer may appoint any person to act as secretary of the meeting.

Section 3.9. Voting of Shares.

(a) Every shareholder entitled to vote may vote in person or by proxy. Unless otherwise provided by law, directors shall be elected by a majority of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. Shareholders do not have the right to cumulate their votes for the election of directors.

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(b) The shareholders having the right to vote shares at any meeting shall be only those of record on the stock books of the Corporation, on the record date fixed by law or pursuant to the provisions of Section 3.5 of these bylaws.

(c) Absent special circumstances approved by the Board of Directors, the shares of the Corporation held, directly or indirectly, by another corporation, are not entitled to vote if a majority of the shares entitled to vote for the election of directors of such other corporation is held by the Corporation. The foregoing does not limit the power of the Corporation to vote any shares held by the Corporation in a fiduciary capacity.

(d) Voting by shareholders on any question or in any election may be viva voce unless the chairperson of the meeting shall order or any shareholder shall demand that voting be by ballot. On a vote by ballot, each ballot shall be signed by the shareholder voting, or in the shareholder’s name by proxy, if there be such proxy, and shall state the number of shares voted by such shareholder.

(e) If a quorum exists, action on a matter, other than the election of directors, by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless a greater number is required by law.

Section 3.10. Proxies.

Any shareholder entitled to vote at any meeting of the shareholders may authorize another person or persons to vote at any such meeting for such shareholder by proxy. A shareholder may authorize a valid proxy by executing a written instrument signed by such shareholder, the shareholder’s attorney in fact, or such shareholder’s authorized officer, director, employee or agent, or by causing such signature to be affixed to such writing by any reasonable means including, but not limited to, by facsimile signature, or by transmitting or authorizing the transmission of a telegram, cablegram, data and voice telephonic communications, computer network, e-mail or other means of electronic transmission to the person designated as the holder of the proxy, a proxy solicitation firm, a proxy support service organization or a like authorized agent. An electronic transmission must contain or be accompanied by information for which one can determine that the shareholder, the shareholder’s agent, or the shareholder’s attorney in fact authorized the electronic transmission. No such proxy shall be voted or acted upon after the expiration of eleven years from the date of such proxy, unless such proxy provides for a longer period. Every proxy shall be revocable at the pleasure of the shareholder executing it, except in those cases where applicable law provides that a proxy shall be irrevocable. A shareholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by filing another duly executed proxy bearing a later date with the Secretary. Proxies by telegram, cablegram, data and voice telephonic communications, computer network, e-mail or other electronic transmission must either set forth or be submitted with information from which it can be determined that such electronic transmission was authorized by the shareholder. If it is determined that such electronic transmission is valid, the inspectors shall specify the information upon which they relied. Any copy, facsimile telecommunication or other reliable reproduction of a writing or transmission created pursuant to this section may be substituted or used in lieu of the original writing or

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transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

Section 3.11. Inspectors.

The Board of Directors in advance of any meeting of shareholders may (but shall not be obligated to) appoint inspectors to act at such meeting or any adjournment thereof. If inspectors are not so appointed, the officer or person acting as presiding officer of any such meeting may, and on the request of any shareholder or the shareholder’s proxy, shall make such appointment. In case any person appointed as inspector shall fail to appear or act, the vacancy may be filled by appointment made by the Board of Directors in advance of the meeting, or at the meeting by the officer or person acting as presiding officer. The inspectors shall ascertain the number of shares outstanding and the voting power of each; determine the shares represented at a meeting; determine the validity of proxies and ballots; count all votes and determine the result. Each inspector shall take and sign an oath to faithfully execute the duties of inspector with strict impartiality and according to the best of the inspector’s ability. The maximum number of such inspectors appointed shall be three (3), and no inspector whether appointed by the Board of Directors or by the officer or person acting as presiding officer need be a shareholder.

Section 3.12. New Business and Nomination of Directors

(a) At an annual meeting of the shareholders, only such business shall be conducted as shall have properly been brought before the meeting. To be properly brought before an annual meeting, business must be: (A) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors; (B) otherwise properly brought before the meeting by or at the direction of the Board of Directors; or (C) otherwise properly brought before the meeting by a shareholder of the Corporation who is entitled to vote with respect thereto and who complies with the notice procedures set forth in this paragraph. For business to be properly brought before an annual meeting by a shareholder, the shareholder must have given a timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder’s notice must be delivered or mailed to and received at the principal executive offices of the Corporation not less than one hundred twenty (120) calendar days in advance of the date specified in the Corporation’s proxy statement released to shareholders in connection with the previous year’s annual meeting of shareholders; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year’s proxy statement, notice by the shareholder to be timely must be received not later than the close of business on the later of one hundred twenty (120) calendar days in advance of such annual meeting or ten (10) calendar days following the date on which public announcement of the date of the meeting is first made. A shareholder’s notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the Corporation’s books, of the shareholder proposing such business, (iii) the class and number of shares of the Corporation’s capital stock that are

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beneficially owned by such shareholder and (iv) any material interest of the shareholder in such business, and any other information that is required to be provided by the shareholder pursuant to Regulation 14A under the Securities and Exchange Act of 1934, as amended (the “1934 Act”), in his or her capacity as a proponent to a shareholder proposal. Notwithstanding the foregoing, in order to include information with respect to a shareholder proposal in the proxy statement and form of proxy for a shareholder’s meeting, shareholders must provide notice as required by regulations promulgated under the 1934 Act. Notwithstanding anything in these bylaws to the contrary, no business shall be brought before or conducted at an annual meeting except in accordance with the provisions of this paragraph. The officer of the Corporation or other person presiding over the annual meeting shall, if the facts so warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this paragraph (a), and, if he or she should so determine, he or she shall so declare at the meeting that any such business not properly brought before the meeting shall not be transacted. This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, directors, and committees, but, in connection with such reports, no new business shall be acted upon at such annual meeting unless stated and filed as herein provided.

(b) At any special meeting of the shareholders, only such business shall be conducted as shall have been brought before the meeting by or at the direction of the Board of Directors, unless such special meeting of the shareholders was called in accordance with Section 3.2 of these bylaws pursuant to the written demand of at least ten percent (10%) of all the votes entitled to be cast on any issue proposed to be considered at such meeting, in which case only such business as is stated in the applicable written demand may be brought before the special meeting of the shareholders.

(c) Only persons who are nominated in accordance with the procedures set forth in this paragraph (c) shall be eligible for election as directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of shareholders at which directors are to be elected only (i) by or at the direction of the Board of Directors or (ii) by any shareholder of the Corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this paragraph (c). Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation in accordance with the provisions of paragraph (a) of this Section 3.12. Such shareholder’s notice shall set forth (i) as to each person whom the shareholder proposes to nominate for election or re-election as a director: (A) the name, age, business address and residence address of such person, (B) the principal occupation or employment of such person, (C) the class and number of shares of the Corporation which are beneficially owned by such person, (D) a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the shareholder, and (E) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the 1934 Act (including without limitation such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (ii) as to the shareholder giving the notice, the

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information required to be provided pursuant to paragraph (a) of this Section 3.12. At the request of the Board of Directors, any person nominated by a shareholder for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a shareholder’s notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the provisions of this paragraph (c). The officer of the Corporation or other person presiding at the meeting shall, if the facts so warrant, determine and declare at the meeting that a nomination was not made in accordance with the procedure proscribed by bylaws and, if he or she should so determine, he or she shall so declare at the meeting, and the defective nomination shall be disregarded.

Section 3.13. Organization

Meetings of shareholders shall be presided over by the chairman of the board, if any, or in his or her absence by the Chief Executive Officer, if any, or in his or her absence by the president, if any, or in his or her absence by an executive vice president, if any, or in the absence of the foregoing persons by a chairman designated by the Board of Directors, or in the absence of such designation by a chairman chosen at the meeting by the vote of a majority in interest of the shareholders present in person or represented by proxy and entitled to vote thereon. The secretary or in his or her absence an assistant secretary or in the absence of the secretary and all assistant secretaries a person whom the chairman of the meeting shall appoint shall act as secretary of the meeting and keep a record of the proceedings thereof.

The Board of Directors of the Corporation shall be entitled to make such rules or regulations for the conduct of meetings of shareholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Directors, if any, the chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgement of such chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in such meeting to shareholders of record of the corporation and their duly authorized and constituted proxies, and such other persons as the chairman shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants and regulations of the opening and closing of the polls for balloting and matters which are to be voted on by ballot. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of shareholders shall not be required to be held in accordance with rules of parliamentary procedure.

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ARTICLE IV

BOARD OF DIRECTORS

Section 4.1. Qualifications and General Powers.

No director is required to be an officer or employee or a shareholder of the Corporation or a resident of the State of Iowa. The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or to execute and deliver any instrument in the name and on behalf of the Corporation, and such authority may be general or confined to specific instances.

Section 4.2. Number of Directors; Tenure.

The number of directors of the Corporation shall be not less than seven (7) nor more than twenty-one (21), the exact number within such range to be determined from time to time by resolution of the Board of Directors adopted by the affirmative vote of a majority of the entire Board of Directors then in office. The Board of Directors shall not be authorized to change the range or to change to a fixed number of directors without the approval of the shareholders. At each annual election, the successors to the class of directors whose term expires at that time shall be elected by the shareholders to hold office for a term of three years to succeed those directors whose term expires and until his or her successor shall have been elected and qualified, or until his or her death, resignation or removal.

Section 4.3. Quorum and Manner of Acting.

A quorum of the Board of Directors consists of a majority of the number of directors prescribed in accordance with Section 4.2. If at any meeting of the board there be less than a quorum present, a majority of the directors present may adjourn the meeting from time to time until a quorum shall be present. Notice of any adjourned meeting need not be given. At all meetings of directors, a quorum being present, the act of the majority of the directors present at the meeting shall be the act of the Board of Directors.

Section 4.4. Resignation.

Any director of the Corporation may resign at any time by delivering written notice to the Chairman of the Board, the Board of Directors, or the Corporation. A resignation is effective when the notice is delivered unless the notice specifies a later effective date.

Section 4.5. Removal.

A director shall be subject to removal, with or without cause, at a meeting of the shareholders called for that purpose in the manner prescribed by law and these bylaws.

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Section 4.6. Vacancies.

Any vacancy occurring in the Board of Directors through death, resignation, removal or any other cause, including an increase in the number of directors, may be filled by the Board of Directors. If the directors remaining in office constitute fewer than a quorum of the board, they may fill the vacancy by the affirmative vote of a majority of the remaining directors.

Section 4.7. Compensation of Directors.

The directors shall be entitled to be reimbursed for any expenses paid by them on account of attendance at any regular or special meeting of the Board of Directors and the board may fix the compensation of directors from time to time by resolution of the board.

Section 4.8. Place of Meetings, etc.

The Board of Directors may hold its meetings at such place or places within or without the State of Iowa. The Board of Directors may meet in person or via any means of communication, including, but not limited to telephone conference call, by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.

Section 4.9. Annual Meeting.

Immediately after the final adjournment of each annual meeting of the shareholders for the election of directors, or at such other time or place as the Board of Directors shall designate, the Board of Directors shall meet for the purpose of organization, the election of officers and the transaction of other business. Notice of such meeting shall be given as set forth in Sections 4.10 and 4.11. Such meeting may be held at any other time or place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors or in a consent and waiver of notice thereof signed by all the directors, at which meeting the same matters shall be acted upon as is above provided.

Section 4.10. Regular Meetings.

Regular meetings of the Board of Directors shall be held at such place and at such times as the Board of Directors shall by resolution fix and determine from time to time. Notice of each such meeting shall be communicated to each director at least five (5) days before the date on which the meeting is to be held.

Section 4.11. Special Meetings: Notice.

(a) Special meetings of the Board of Directors shall be held whenever called by direction of the Chairman of the Board or one-fourth (1/4) of the directors at the time being in office.

(b) Notice of each such meeting shall be communicated to each director at least two (2) days before the date on which the meeting is to be held. Each notice shall state the date, time and place of the meeting. Unless otherwise stated in the notice thereof, any and all business may

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be transacted at a special meeting. At any meeting at which every director shall be present, even without any notice, any business may be transacted.

Section 4.12. Waiver of Notice.

A director may waive any notice required by law or these bylaws if in writing and signed by a director entitled to such notice, whether before or after the date and time stated in such notice. Such a waiver shall be equivalent to notice in due time as required by these bylaws. Attendance of a director at or participation in a meeting shall constitute a waiver of notice of such meeting, unless the director at the beginning of the meeting or promptly upon arrival objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting.

Section 4.13. Director’s Assent Presumed.

A director who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless the director objects at the beginning of the meeting, or promptly upon the director’s arrival to holding it or transacting business at the meeting, or the director’s dissent or abstention shall be entered in the minutes of the meeting or unless the director shall file a written dissent or abstention to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent or abstention by registered or certified mail to the Secretary immediately after the adjournment of the meeting. Such right to dissent or abstain shall not apply to a director who voted in favor of such action.

Section 4.14. Order of Business.

(a) At meetings of the Board of Directors, business shall be transacted in such order as, from time to time, the Chairman of the Board or the Board of Directors may determine.

(b) At all meetings of the board, the Chairman of the Board or, in his or her absence, the person designated by the vote of a majority of the directors present shall preside.

Section 4.15. Action Without Meeting.

Any action required or permitted by law to be taken at any meeting of the Board of Directors may be taken without a meeting if the action is taken by all the directors and if one or more consents in writing describing the action so taken shall be signed by each director then in office and included in the minutes or filed with the corporate records reflecting the action taken. Action taken under this section is effective when the last director signs the consent, unless the consent specifies a different effective date. Written consents may be delivered to the Corporation by electronic transmission. A director’s consent may be withdrawn by a revocation signed by the director and delivered to the Corporation prior to the delivery to the Corporation of unrevoked written consents signed by all of the directors.

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Section 4.16. Dividends.

The Board of Directors may authorize and the Corporation may make distributions to its shareholders in cash or property, but no distribution may be made if, after giving it effect, either of the following would result:

(a) The Corporation would not be able to pay its debts as they become due in the usual course of business; or

(b) The Corporation’s total assets would be less than the sum of its total liabilities plus, unless the Articles of Incorporation permit otherwise, the amount that would be needed, if the Corporation were to be dissolved at the time of this distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution.

The Board of Directors may base a determination that a distribution is not prohibited either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances.

ARTICLE V

THE EXECUTIVE COMMITTEE AND OTHER COMMITTEES

Section 5.1.

The Board of Directors may establish an Executive Committee. The members of the Executive Committee shall serve at the will of the Board of Directors. The Executive Committee shall have and may exercise all of the powers of the Board of Directors in the management of the business and affairs of the Corporation except when the Board of Directors is in session, subject to the limitations set forth in Section 5.3 of these bylaws. The Executive Committee shall fix its own rules governing the conduct of its activities.

Section 5.2. Other Committees.

The Board of Directors, by resolution adopted by the affirmative vote of a majority of the number of directors then in office, may establish one or more other committees of the Board of Directors, each committee to consist of two (2) or more directors appointed by the Board of Directors. Any such committee shall serve at the will of the Board of Directors. Each such committee shall have the powers and duties delegated to it by the Board of Directors. The Board of Directors may elect one or more of its members as alternate members of any such committee who may take the place of any absent member or members at any meeting of such committee, upon request of the Chief Executive Officer or the chairperson of such committee. Each such committee shall fix its own rules governing the conduct of its activities as the Board of Directors may request.

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Section 5.3. Limitations.

A committee of the board shall not: (a) authorize or approve distributions, except according to formula or method, or within limits, prescribed by the Board of Directors; (b) approve or propose to shareholders of the Corporation action that the law requires be approved by shareholders; (c) fill vacancies on the Board of Directors of the Corporation or on any of its committees; provided, however, in the absence or disqualification of a member of a Committee, the member or members present at a meeting and not disqualified from voting may unanimously appoint another director to act in the place of the absent director; or (d) adopt, amend or repeal bylaws of the Corporation.

ARTICLE VI

OFFICERS

Section 6.1. Officers.

The officers of the Corporation shall be a Chairman of the Board, a Chief Executive Officer, a President, one or more Vice Presidents, a Secretary, a Treasurer and such other officers as may from time to time be appointed by the Board of Directors or the Chief Executive Officer in accordance with Section 6.4. One person may hold the offices and perform the duties of any two or more of said offices. In its discretion, the Board of Directors may delegate the powers or duties of any officer to any other officer or agents, notwithstanding any provision of these bylaws, and the Board of Directors may leave unfilled for any such period as it may fix, any office except those of Chairman of the Board, Chief Executive Officer, President, Treasurer and Secretary. The above-identified officers of the Corporation shall be appointed annually by the Board of Directors at the annual meeting thereof and shall perform such duties as from time to time may be assigned to them by the Chief Executive Officer, the President, or by the Board of Directors. Each such officer shall hold office until the next succeeding annual meeting of the Board of Directors and until his or her successor shall have been duly chosen and shall qualify or until his or her death or until he or she shall resign or shall have been removed.

Section 6.2. Resignation and Removal.

An officer may resign at any time by delivering notice to the Secretary. A resignation is effective when the notice is delivered unless the notice specifies a later effective time. Any officer may be removed by the Board of Directors at any time with or without cause, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. An officer may be removed at any time with or without cause by any of the following: (a) the Board of Directors; (b) the officer who appoints such officer, unless these bylaws or the Board of Directors provide otherwise; or (c) any other officer if authorized by these bylaws or the Board of Directors.

Section 6.3. Chairman of the Board.

The Chairman of the Board shall, when present, preside at all meetings of the shareholders. The Chairman of the Board shall, when present, preside at all meetings of the Board of Directors. In

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general he or she shall perform all duties incident to the office of Chairman of the Board and such other duties as may be prescribed by the Board of Directors from time to time.

Section 6.4. Powers and Duties of the Chief Executive Officer.

Subject to the control of the Board of Directors, the Chief Executive Officer shall have general charge of and direct the operations of the Corporation and shall be the Chief Executive Officer of the Corporation. The Chief Executive Officer shall keep the Board of Directors fully informed and shall freely consult with them concerning the business of the Corporation in his or her charge. The Chief Executive Officer shall have authority to sign, execute and acknowledge all contracts, checks, deeds, mortgages, bonds, leases or other obligations on behalf of the Corporation as the Chief Executive Officer may deem necessary or proper to be executed in the course of the Corporation’s regular business as authorized by the Board of Directors. The Chief Executive Officer also shall have the authority to appoint officers below the level of vice-president of the Corporation. The Chief Executive Officer may sign, together with the Secretary or Assistant Secretary, certificates for shares of stock of the Corporation. The Chief Executive Officer may sign in the name of the Corporation reports and all other documents or instruments which are necessary or proper to be executed in the course of the Corporation’s business. He or she shall perform all duties incident to the office of Chief Executive Officer as herein defined, and all such other duties as from time to time may be assigned by the Board of Directors.

Section 6.5. Powers and Duties of the President.

In the absence of the Chief Executive Officer or in the event of his or her death, inability or refusal to act, the President shall perform the duties of the Chief Executive Officer and when so acting shall have the powers of and be subject to all the restrictions upon the Chief Executive Officer. The President may sign with the Secretary or Assistant Secretary all certificates for the shares of stock of the Corporation. The President shall perform all duties incident to the office of President, as herein defined, and all such other duties as from time to time may be assigned by the Chief Executive Officer or by the Board of Directors.

Section 6.6. Powers and Duties of the Vice President(s).

In the absence of the President or in the event of the death, inability or refusal to act of the President, the Vice President (or in the event there is more than one Vice President, the Vice President selected by the Board of Directors) shall perform on an interim basis the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Any Vice President may sign, with the Secretary or Assistant Secretary, certificates for shares of stock of the Corporation; and shall perform such other duties and have such authority as from time to time may be assigned to such Vice President by the Chief Executive Officer, the President or by the Board of Directors.

Section 6.7. Powers and Duties of the Secretary.

The Secretary shall (a) keep minutes of all meetings of the shareholders and of the Board of Directors; (b) authenticate records of the Corporation and attend to giving and serving all notices

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of the Corporation as provided by these bylaws or as required by law; (c) be custodian of the corporate seal, if any, the stock certificate books and such other books, records and papers as the Board of Directors may direct; (d) keep a stock record showing the names of all persons who are shareholders of the Corporation, their post office addresses as furnished by each such shareholder, and the number of shares of each class of stock held by them respectively, and timely prepare the list referred to in Section 3.6; (e) sign with the Chief Executive Officer, the President or a Vice President certificates for shares of stock of the Corporation, the issuance of which shall have been duly authorized; and (f) in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to the Secretary by the Chief Executive Officer or the Board of Directors. In addition, without limiting the foregoing, the Secretary shall be responsible for maintaining and authenticating the following records: (a) minutes of all meetings of the shareholders and Board of Directors; (b) all actions taken by the shareholders or Board of Directors without a meeting; (c) all actions taken by a committee of the Board of Directors in place of the Board of Directors on behalf of the Corporation; (d) Articles or Restated Articles of Incorporation and all amendments to them currently in effect; (e) bylaws or restated bylaws and all amendments to them currently in effect; (f) resolutions adopted by the Board of Directors creating one or more classes or series of shares, and fixing the relative rights, preferences and limitations if shares pursuant to those resolutions are outstanding; (g) all written communications to shareholders generally within the past three years, including the financial statements furnished for the past three years; (h) list of names and business addresses of the current directors and officers; and (i) the Corporation’s most recent biennial report delivered to the Secretary of State.

Section 6.8. Powers and Duties of the Treasurer.

The Treasurer shall (a) have custody of and be responsible for all moneys and securities of the Corporation, shall keep full and accurate records and accounts in books belonging to the Corporation, showing the transactions of the Corporation, its accounts, liabilities and financial condition and shall see that all expenditures are duly authorized and are evidenced by proper receipts and vouchers; (b) deposit in the name of the Corporation in such depository or depositories as are approved by the Board of Directors, all moneys that may come into the Treasurer’s hands for the Corporation’s account; (c) prepare annual financial statements that include a balance sheet as of the end of the fiscal year and an income statement for that year; and (d) in general, perform such duties as may from time to time be assigned to the Treasurer by the Chief Executive Officer or by the Board of Directors.

Section 6.9. Assistants.

There shall be such number of Assistant Secretaries and Assistant Treasurers as the Board of Directors may from time to time authorize and appoint. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties as shall be assigned to them by the Secretary, or the Treasurer, respectively, or by the Chief Executive Officer or the Board of Directors. The Board of Directors shall have the power to appoint any person to act as assistant to any other officer, or to perform the duties of any officer, whenever for any reason it is impracticable for such officer to act personally, and such assistant or acting officer so appointed shall have the power to perform all the duties of the office to which he or she is so appointed to be assistant, or

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as to which he or she is so appointed to act, except as such power may be otherwise defined or restricted by the Board of Directors.

ARTICLE VII

SHARES, THEIR ISSUANCE AND TRANSFER

Section 7.1. Consideration for Shares.

The Board of Directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the Corporation, including cash, promissory notes, services performed, contracts for services to be performed, other securities of the Corporation or securities of any other corporation. Before the Corporation issues shares, the Board of Directors must determine that the consideration received or to be received for shares to be issued is adequate.

Section 7.2. Certificates for Shares; Uncertificated Shares.

(a) Except as set forth in (b) below, every shareholder of the Corporation shall be entitled to a certificate or certificates, to be in such form as the Board of Directors shall prescribe, certifying the number and class of shares of the Corporation owned by such shareholder.

(b) The Board of Directors may authorize the issue of some or all the shares of any or all the classes or series of shares of the Corporation, without certificates. The authorization does not affect shares already represented by certificates until they are surrendered to the Corporation. Within a reasonable time after the issue or transfer of shares without certificates, the Corporation shall send the shareholder a written statement of the information required on certificates by Section 490.625, subsections 2 and 3, and, if applicable, Section 490.627, in each case of the IBCA, as such sections may be amended from time-to-time.

Section 7.3. Execution of Certificates.

The certificates for shares of stock shall be numbered in the order in which they shall be issued and shall be signed by the Chief Executive Officer, President or a Vice President and the Secretary or an Assistant Secretary of the Corporation. The signatures of the Chief Executive Officer, President or Vice President and the Secretary or Assistant Secretary or other persons signing for the Corporation upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the Corporation itself or an employee of the Corporation. In case any officer or other authorized person who has signed or whose facsimile signature has been placed upon such certificate for the Corporation shall have ceased to be such officer or employee or agent before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer or employee or agent at the date of its issue.

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Section 7.4. Share Record.

A record shall be kept by the Secretary, or by any other officer, employee or agent designated by the Board of Directors, of the names and addresses of all shareholders and the number and class of shares held by each represented by such certificates and the respective dates thereof and in case of cancellation, the respective dates of cancellation.

Section 7.5. Cancellation.

Every certificate surrendered to the Corporation for exchange or transfer shall be canceled, and no new certificate or certificates shall be issued in exchange for any existing certificate until such existing certificate shall have been so canceled, except in cases provided in Section 7.8 of these bylaws.

Section 7.6. Transfers of Stock.

Transfers of shares of the capital stock of the Corporation shall be made only on the books of the Corporation by the record holder thereof, or by his or her attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the Corporation, and on surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes thereon or evidence deemed acceptable by the Secretary of the Corporation with respect to uncertificated shares. The person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation; provided, however, that whenever any transfer of shares shall be made for collateral security, and not absolutely, such fact, if known to the Secretary of the Corporation, shall be so expressed in the entry of transfer.

Section 7.7. Regulations.

The Board of Directors may make such other rules and regulations as it may deem expedient, not inconsistent with law, concerning the issue, transfer and registration of certificates for shares of the stock of the Corporation.

Section 7.8. Lost, Destroyed, or Mutilated Certificates.

In the event of the loss, theft or destruction of any certificate of stock, another may be issued in its place pursuant to such regulations as the Board of Directors may establish concerning proof of such loss, theft or destruction and concerning the giving of a satisfactory bond or bonds of indemnity.

ARTICLE VIII

MISCELLANEOUS PROVISIONS

Section 8.1. Facsimile and Electronic Signatures.

     In addition to the provisions for use of facsimile and electronic signatures elsewhere specifically authorized in these bylaws, facsimile signatures of any officer or officers of the

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Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof. An “electronic signature” is any electronic symbol or process attached to or logically associated with a document sent by electronic transmission and executed or adopted by a person with the intent to sign such document. “Electronic signature” includes (i) a unique password or unique identification assigned to a person by the Corporation; (ii) a person’s typed name attached to or part of an electronic transmission sent by or from a source authorized by such person such as an e-mail address provided by such person as that person’s e-mail address; (iii) a person’s facsimile signature; and (iv) any other form of electronic signature approved by the Board.

Section 8.2. Fiscal Year.

The fiscal year of the Corporation shall be from the first day of January through the last day of December.

Section 8.3. Books and Records.

The books and records of the Corporation shall be kept (except that the shareholder list must also be kept at the places described in Section 3.6 of these bylaws) at the principal office of the Corporation.

Section 8.4. Voting of Stocks Owned by the Corporation.

In the absence of a resolution of the Board of Directors to the contrary, the Chief Executive Officer, the President and any Vice President acting within the scope of his or her authority as provided in Section 6.6 of these bylaws, are authorized and empowered on behalf of the Corporation to attend and vote, or to grant discretionary proxies to be used, at any meeting of shareholders of any corporation in which this Corporation holds or owns shares of stock, and in that connection, on behalf of this Corporation, to execute a waiver of notice of any such meeting or a written consent to action without a meeting. The Board of Directors shall have authority to designate any officer or person as a proxy or attorney-in fact to vote shares of stock in any other corporation in which this Corporation may own or hold shares of stock.

Section 8.5. Shareholders’ Right to Information.

(a) A shareholder of the Corporation is entitled to inspect and copy, during regular business hours at the Corporation’s principal office, any of the following records of the Corporation, if the shareholder gives the Corporation written notice of the shareholder’s demand at least five (5) business days before the date on which the shareholder wishes to inspect a copy of any of the following: (i) Articles or Restated Articles of Incorporation and all amendments currently in effect; (ii) bylaws or restated bylaws and all amendments currently in effect; (iii) resolutions adopted by the Board of Directors creating one or more classes or series of shares and fixing their relative rights, preferences and limitations, if shares issued pursuant to those resolutions are outstanding; (iv) minutes of all shareholders’ meetings and records of all action taken by shareholders without a meeting, for the past three (3) years; (v) all written communications to shareholders generally within the past three (3) years, including the financial statements furnished for the past three (3) years; (vi) a list of the names and

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business addresses of the Corporation’s current directors and officers; and (vii) the Corporation’s most recent biennial report delivered to the Iowa Secretary of State.

(b) If a shareholder makes a demand in good faith and for a proper purpose, the shareholder describes with reasonable particularity the shareholder’s purpose and the records the shareholder desires to inspect, and the record requested is directly connected with the shareholder’s stated purpose, then the shareholder shall be entitled to inspect and copy, during regular business hours at a reasonable location specified by the Corporation, any of the following records of the Corporation, provided the shareholder gives the Corporation written notice of the shareholder’s demand at least five (5) business days before the date on which the shareholder wishes to inspect and copy any of the following: (i) excerpts from minutes of any meeting of the Board of Directors, records of any actions of a committee of the Board of Directors while acting in place of the Board of Directors on behalf of the Corporation, minutes of any meeting of the shareholders, and records of action taken by the shareholders or the Board of Directors without a meeting to the extent not subject to inspection under Section 8.5(a) of these bylaws; (ii) accounting records of the Corporation; and (iii) the record of shareholders of the Corporation.

(c) The Corporation may impose a reasonable charge, covering the costs of labor and material, for copies of any documents provided to the shareholder. The charge shall not exceed the estimated cost of production or reproduction of the records.

(d) Upon written request from a shareholder, the Corporation, at its expense, shall furnish to that shareholder the annual financial statements of the Corporation, including a balance sheet and income statement and, if the annual financial statements are reported upon by a public accountant, that report must accompany them.

Section 8.6 Inspection of Records by Directors.

A director is entitled to inspect and copy the books, records, and documents of the Corporation at any reasonable time to the extent reasonably related to the performance of the director’s duties as a director, including any duties as a member of a committee, but not for any other purpose or in any manner that would violate any duty to the Corporation.

Section 8.7. Electronic Transmissions.

“Electronic transmission” or “electronically transmitted” means any process of communication not directly involving the physical transfer of paper that is suitable for the retention, retrieval, and reproduction of information by the recipient. Notice by electronic transmission is written notice. Notices and written consents may be given by electronic transmission. Each written consent given by electronic transmission shall contain an electronic signature of the person giving such written consent.

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ARTICLE IX

INDEMNIFICATION AND INSURANCE

Section 9.1 Indemnification of Directors.

The Corporation shall indemnify its directors and officers in accordance with the Articles of Incorporation and applicable law.

Section 9.2 Indemnification of Officers.

The Corporation shall indemnify and advance expenses to an officer of the Corporation or any of the subsidiaries of the Corporation who is a party to a proceeding because the person is an officer as follows:

(a) Subject to subparagraph (c) below, if the person is an officer and a director, to the same extent as the Corporation is required to indemnify a director pursuant to the terms of the Articles of Incorporation.

(b) If the person is an officer but not a director, the Corporation shall indemnify and advance expenses except for:

(i) Liability in connection with a proceeding by or in the right of the Corporation other than for reasonable expenses incurred in connection with the proceeding; or

(ii) Liability arising out of conduct that constitutes any of the following:

(A) Receipt by the officer of a financial benefit to which the officer is not entitled;

(B) An intentional infliction of harm on the Corporation or the shareholders; or

(C) An intentional violation of criminal law.

(c) The provisions of subparagraph (b) above shall apply to an officer who is also a director if the basis on which the person is made a party to the proceeding is an act or omission solely as an officer.

Section 9.3 Insurance.

The Corporation may purchase and maintain insurance, at its expense, to protect itself and any person who is or was a director, officer, employee or agent of the Corporation, or any of its subsidiaries, whether before or after the conversion of the Corporation from a mutual insurance holding company, or is or was serving at the request of the Corporation or any of its subsidiaries, whether before or after the conversion from a mutual insurance holding company, as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan against any liability asserted against such person and incurred by such person in such capacity, or arising out of such person’s status as such,

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whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article IX, the IBCA or otherwise. The Corporation may create a trust fund, grant a security interest and/or use other means (including, without limitation, letters of credit, surety bonds and/or similar arrangements), as well as enter into contracts providing for indemnification to the maximum extent permitted by law and including as part thereof any or all of the foregoing, to ensure the payment of such sums as may become necessary to effect full indemnification. The Corporation’s obligation to make indemnification and pay expenses pursuant to this Article IX shall be in excess of any insurance purchased and maintained by the Corporation and such insurance shall be primary. To the extent that indemnity or expenses of a person entitled to indemnification and payment of expenses pursuant to this Article IX are paid on behalf of or to such person by such insurance such payments shall be deemed to be in satisfaction of the Corporation’s obligation to such person to make indemnification and pay expenses pursuant to this Article IX.

ARTICLE X

EMERGENCY BYLAWS

Section 10.l. National Emergency.

In the event of a national emergency because of some catastrophic event which makes it impossible to conduct the business of the Corporation in accordance with the Articles of Incorporation or these bylaws, the provisions of this Article X (hereinafter referred to as the Emergency Bylaws) shall become operative.

Section 10.2. Emergency Executive Committee.

(a) Upon the Emergency Bylaws becoming operative a meeting of the Executive Committee may be called by any director or officer of the Corporation. Three (3) members of the Executive Committee shall constitute a quorum for the transaction of business at all such meetings of the Executive Committee. For purposes of this Article X, in the event that an Executive Committee is not then in existence, the following shall constitute members of the Executive Committee: Chairman of the Board, Chief Executive Officer and the chairmen of the other committees established pursuant to Section 5.2 hereof.

(b) To the extent required to constitute a quorum at any such meeting of the Executive Committee, first the available directors who are not members of the Executive Committee in order of seniority as directors and then the available officers of the Corporation in order of seniority determined pursuant to Article VI of these bylaws shall be deemed members of the Executive Committee for such meeting. The Board of Directors may, before these Emergency Bylaws become operative, prepare a list of other officers of the Corporation or other persons who shall be deemed members of the Executive Committee at any meeting of the Executive Committee pursuant to these Emergency Bylaws in the event that there are no directors or officers determined pursuant to Article VI of these bylaws capable of serving as members of

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the Executive Committee. The list shall specify the order of priority in which such persons shall serve.

(c) Any vacancy on the Executive Committee pursuant to these Emergency Bylaws may be filled at any meeting of the Executive Committee by a majority of the members, though less than a quorum, or by the sole remaining member. Such members shall serve until the annual meeting of the Board of Directors following the end of the national emergency or until the successors are appointed and qualified.

Section 10.3. Alternative Places of Business.

The Board of Directors, before these Emergency Bylaws become operative, may, effective when these Emergency Bylaws are operative, designate several alternate places of business.

Section 10.4. Duration.

To the extent not inconsistent with this Section, the bylaws of the Corporation shall remain in effect during the national emergency and upon termination of the national emergency these Emergency Bylaws shall cease to be operative.

ARTICLE XI

AMENDMENTS

Section 11.1. Amendments to Bylaws.

These bylaws may be amended or repealed by the Board of Directors or by the shareholders; provided, however, that the shareholders may from time to time specify particular provisions of the bylaws which shall not be amended or repealed by the Board of Directors.

Effective Date: May 27, 2004

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EX-10.1

Exhibit 10.1

AMENDED AND RESTATED
RETIREMENT AGREEMENT

     This Agreement dated as of 22^nd day of August, 2003 between AmerUs Group Co., an Iowa Corporation (“AmerUs”) and Victor N. Daley, Executive Vice President, Chief Administration and Human Resources Officer of AmerUs and certain of its affiliates (“Mr. Daley”) hereby amends, restates, confirms and formalizes certain understandings between Mr. Daley and AmerUs which were agreed to by Mr. Daley and AmerUs at the time Mr. Daley agreed to undertake his duties on behalf of AmerUs and its affiliates and predecessors and which have thereafter been updated to reflect certain changed circumstances.

     IN CONSIDERATION of Mr. Daley’s agreement to accept the aforementioned position with AmerUs and the continuing performance of those duties and in consideration of the promises and covenants made hereunder, AmerUs and Mr. Daley agree as follows.

     1. Except as provided in the succeeding sentence, beginning on August 31, 2008, AmerUs agrees to pay to Mr. Daley, or his spouse in the event that Mr. Daley should predecease her, a monthly amount equal to the Retirement Amount as calculated below. In the event that Mr. Daley terminates his employment with AmerUs and its affiliates prior to August 31, 2008, Mr. Daley may elect, by giving at least 30 days written notice to the AmerUs Benefit and Pension Committee, to have monthly payments of the Retirement Amounts (or such lesser amount as provided in the immediately succeeding sentence) commence as of any month after such termination of employment. In the event of such an election, the monthly amount payable to Mr. Daley shall be equal to the Retirement Amount reduced pursuant to the formula set forth in Section 4.03 of the 1/1/96 AmerUs Pension Plan. For the purposes of the preceding sentence, the term “Early Retirement Date” in such Section 4.03 shall be replaced with the term “Early

Commencement Date,” as defined in Section 4 of this Agreement, and the term “Normal Retirement Age” in such Section 4.03 shall be replaced with the term “age 65.” The monthly payments made pursuant to this Agreement shall be made on the last day of each month beginning August 31, 2008, (or Mr. Daley’s Early Commencement Date, if applicable) until the later of the death of Mr. Daley or his spouse.

     2. The “Retirement Amount” means the amount calculated by (A) multiplying ..2693% by the number of months that Mr. Daley has been and is employed on a full time basis by AmerUs and its predecessor companies, (B) multiplying the product derived in clause (A) by sum of (i) the result of (a) multiplying $3,000 times the number of months that Mr. Daley has been employed on a full-time basis by AmerUs minus 37 months and (b) dividing the product derived in clause (i)(a) by the number of months that Mr. Daley has been employed on a full-time basis; plus (ii) Mr. Daley’s average monthly income as derived from his Pensionable Earnings, as defined in Article I Subsection (17) of the All*AmerUs Savings and Retirement Plan (without regard to the last sentence in such Subsection (17)), excluding income from stock options, stock grants and other awards under the AmerUs Stock Incentive Plan, and then (C) subtracting the “Monthly Base Amount” (as hereinafter defined) from the product of clauses A and B. The Monthly Base Amount is an amount calculated by (i) adding the maximum amount which AmerUs would be permitted to contribute in the aggregate as its “matching”, “core” and “interim benefit supplement” contributions (as those terms are used in the Plans) for each month that Mr. Daley has been employed on a full time basis by AmerUs to Mr. Daley’s accounts in the All*AmerUs Savings and Retirement Plan and the All*AmerUs Supplemental Executive

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Retirement Plan, All*AmerUs Excess Benefit Plan and the Non-Qualified Non-Funded Deferred Compensation Agreement of October 1, 1998 (together the “Plans”) assuming that Mr. Daley would make the maximum permitted deferral; (ii) deducting from the amounts determined under clause (i) two percent (2%) of the sum of a) Mr. Daley’s Pensionable Earnings for each month that he is employed on a full time basis after January 1, 1996 and b) $3000 per month for each month that he is employed on a full time basis after October 1, 1998, and then (iii) crediting the amount of the remainder determined pursuant to the subtraction of clause (ii) from the amount determined in clause (i) with an interest rate equal to the actual earnings in the Plans on such remainder; and (iv) adding (a) the amount of the remainder determined pursuant to the subtraction of clause (ii) from the amount determined in clause (i) and (b) the amount calculated in accordance with clause (iii) as of the 8^th of the month in which the first payment under this Agreement shall be made (together the “Final Amount”) and then determining the monthly amount that would be payable under a net single premium life annuity purchased on that date with the Final Amount, with an initial payment on the last day of the month in which the first payment under this Agreement shall be made, which utilizes the method of determining assumptions present in the 1/1/96 American Mutual Life Insurance Pension Plan which monthly amount shall be the “Monthly Base Amount.” An illustration of this calculation in this Section 2 making a number of assumptions, including an initial payment date of, and a continuation of employment until August 31, 2008, is attached to this Agreement as Exhibit 1.

3. In the event (a) there is a Change of Control and (b) (i) Mr. Daley’s employment with AmerUs or any successor thereof is terminated, with such termination being neither by Mr.

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Daley nor for Cause (as defined in Section 4), and no Comparable Employment (as defined in Section 4) is offered to Mr. Daley or (ii) Mr. Daley terminates his employment for Good Reason, then the Retirement Amount shall be calculated as if Mr. Daley had continued his employment with AmerUs on a full time basis until August 31^st of 2008 with (1) the number of months in Section 2 (A)-(B) of this Agreement becoming 156 and (2) the average monthly income for each month from the date of his initial employment until his termination date being calculated pursuant to Section 2(B)(ii) and the average monthly income for each month from the date of termination until August 31, 2008 being equal to the average monthly income for the full fiscal year ended on the December 31^st prior to his termination calculated for that period pursuant to Section 2(B)(ii), and the Monthly Base Amount being the amount calculated pursuant to Section 2 which will only include contributions for months he was actively employed by AmerUs. The monthly payments made pursuant to this Section 3 shall begin on August 31, 2008 unless Mr. Daley elects under Section 1 to have such payments begin on his Early Commencement Date, in which case the payments shall be adjusted in the manner described in the third sentence of Section 1.

     4. The following definitions shall apply to this Agreement.

     “AmerUs Stock Incentive Plan” shall mean collectively the AmerUs Life Holdings, Inc. Stock Incentive Plan, the AmerUs Group Co. 2000 Stock Incentive Plan and the AmerUs Group Co. 2003 Stock Incentive Plan, and any similar plans enacted after the date hereof.

     “Cause” shall mean Mr. Daley’s personal dishonesty, gross negligence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform

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stated duties, willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of this Agreement.

     “Change of Control” shall mean any of the following events: (a) any Person or group (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act) other than a Subsidiary of AmerUs Group Co. (for purposes of this definition, “Subsidiary” shall mean each of those Persons of which another Person, directly or indirectly through one or more Subsidiaries, owns beneficially securities having more than 25% of the voting power in the election of directors (or Persons fulfilling similar functions or duties) of the owned Person (without giving effect to any contingent voting rights)) or any employee benefit plan (or any related trust) of AmerUs Group Co. or a Subsidiary of AmerUs Group Co., becomes the beneficial owner (as such term is defined in Rule 13d-3 of the Exchange Act) of (1) 25% or more of the common stock of AmerUs Group Co. or (2) securities of AmerUs Group Co. that are entitled to vote generally in the election of directors of AmerUs Group Co. (“Voting Securities”) representing 25% or more of the combined voting power of all Voting Securities of AmerUs Group Co.; (b) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board of Directors of AmerUs Group Co. (the “Board”) and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of AmerUs Group Co.) whose appointment or election by the Board or nomination for election by AmerUs Group Co.’s

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stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or (c) there is consummated a merger, reorganization or consolidation involving AmerUs Group Co. or any direct or indirect Subsidiary of AmerUs Group Co. and any other corporation or other entity, other than a merger, reorganization or consolidation which results in the common stock and Voting Securities of AmerUs Group Co. outstanding immediately prior to such merger, reorganization or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 60%, respectively, of the common stock and combined voting power of the Voting Securities of AmerUs Group Co. or such surviving entity or any parent thereof outstanding immediately after such merger, reorganization or consolidation, or (d) the stockholders of AmerUs Group Co. approve a plan of complete liquidation or dissolution of AmerUs Group Co. or there is consummated an agreement for the sale or disposition by AmerUs Group Co. of all or substantially all of AmerUs Group Co.’s assets.

     “Comparable Employment” shall mean employment with Employer, an Affiliate thereof or a third party involved in any Change of Control on terms and conditions which are no less favorable, in the aggregate to the terms and conditions of employment prevailing with respect to Employee immediately preceding a Change of Control, provided, however, such an offer of employment shall not be Comparable Employment if the acceptance of such offer would result in:

(1) Assignment of duties or responsibilities that are substantially inconsistent with

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	Employee’s position, duties, responsibility or status with Employer immediately prior to the Change of Control or a substantial reduction of Employee’s duties or responsibilities as compared with Employee’s duties and responsibilities immediately prior to the Change of Control including; without limitation, Employee ceasing to be an executive officer, as that term is used pursuant to Regulation §229.401 of Regulation S-K under the Securities Act of 1933, the Securities Act of 1934 and the Energy Policy and Conservation Act of 1975, of a public company;
(2)	A reduction in the amount of Employee’s Base Compensation, a material reduction in Employee’s annual incentive compensation opportunity or long term incentive compensation opportunity (including an adverse change in performance criteria or a decrease in the target amount of annual or long term incentive compensation) or a material reduction in any other employee perquisites to which Employee is entitled, from that in effect immediately prior to the Change of Control, or
(3)	A relocation of Employee’s principal office to a location more than thirty-five (35) miles from the location of such office immediately prior to the Change of Control.

     “Early Commencement Date” shall mean the last day of the month in which Mr. Daley elects to have monthly payments begin pursuant to the second sentence of Section 1.

     “Good Reason” shall mean the occurrence of both (i) a Change of Control without Employee

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being offered Comparable Employment and (ii) a Material Event.

     “Material Event” shall mean the occurrence of any one of the following events without Employee’s express written consent:

(1)	The assignment to Employee of duties substantially inconsistent with Employee’s position, duties, responsibility or status with Employer or a substantial reduction of Employee’s duties or responsibilities, as compared with Employee’s duties or responsibilities prior to such reduction, or any removal of Employee from, or any failure to re-elect Employee to, the position Employee held at the time of such removal or failure to re-elect, except in connection with termination of employment for Cause including, without limitation, Employee ceasing to be an executive officer, as that term is used pursuant to Regulation §229.401 of Regulation S-K under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Energy Policy and Conservation Act of 1975, of a public company; or
(2)	A reduction in the amount of Employee’s Base Compensation, a material reduction in payments received by Employee under any bonus or incentive plans in which Employee participates or a material reduction in any other employee perquisites to which Employee is entitled; or
(3)	The relocation of Employee’s principal office to a location more than thirty-five (35) miles from the location of such office immediately prior to such relocation; or

8

(4) Any material breach of Employer of any of the provisions of this Agreement.

     “Transaction” shall mean any merger, consolidation, tender or exchange offer, dissolution, liquidation, sale or exchange of stock, business combination, sale or exchange of all or substantially all assets, demutualization or other similar transaction or combination of the foregoing by or between persons who were not under common control prior to the transaction.

     5. This Agreement does not constitute an agreement of employment or the promise to employ Mr. Daley for any specified period of time. It continues to be the understanding between AmerUs and Mr. Daley that Mr. Daley is and will continue to be an employee at will.

     6. This Agreement may not be amended or modified in any way except in a writing signed by both parties.

     7. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the parties.

     8. AmerUs and Mr. Daley designate the AmerUs Benefit and Pension Committee, as appointed by the Board of Directors, to administer and interpret this Agreement with all necessary discretion. The determinations of the AmerUs Benefit and Pension Committee shall be binding on the parties hereto.

     9. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, written and oral, among the parties with respect to the subject matter hereof including the agreements of June 27, 1997 and March 14, 2000.

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     Executed as of the 22^nd day of August, 2003.

AmerUs Group Co.
By:	/s/ Roger K. Brooks
	Roger K. Brooks
	/s/ Victor N. Daley
	Victor N. Daley

10

EX-11

Exhibit 11

AmerUs Group Co.
Statement Re: Computation of Earnings Per Share

	For The Three Months Ended June 30,
	2004							2003
	Net		Number of		Per Share			Net		Number of		Per Share
	Income		Shares		Amount			Income		Shares		Amount
			(in thousands, except per share amounts)
Basic EPS
Net income from continuing operations	$	48,776		39,327	$	1.24		$	43,176		39,162	$	1.10
Effect of dilutive securities
Options		—		656		(0.02	)		—		242		—
PRIDES		—		777		(0.02	)		—		—		—
Diluted EPS	$	48,776		40,760	$	1.20		$	43,176		39,404	$	1.10

	For The Six Months Ended June 30,
	2004							2003
	Net		Number of		Per Share			Net		Number of		Per Share
	Income		Shares		Amount			Income		Shares		Amount
			(in thousands, except per share amounts)
Basic EPS
Net income from continuing operations	$	78,516		39,342	$	2.00		$	78,479		39,112	$	2.01
Effect of dilutive securities
Options		—		626		(0.03	)		—		243		(0.02	)
PRIDES		—		651		(0.04	)		—		—		—
Diluted EPS	$	78,516		40,619	$	1.93		$	78,479		39,355	$	1.99

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EX-12

Exhibit 12

AMERUS GROUP CO.
STATEMENT RE: COMPUTATION OF RATIOS
RATIO OF EARNINGS TO FIXED CHARGES

	Six Months Ended June 30,
	2004		2003		2003		2002			2001		2000		1999
	($ in thousands)
Earnings
Pre-tax income from continuing operations	$	88,566	$	117,581	$	239,238	$	89,157		$	119,377	$	115,736	$	101,113
Less: Minority interest		—		—		—		—			—		21,677		28,107
Less: Income (loss) from equity investees		3,879		2,687		12,563		(3,993	)		5,072		3,481		(603	)
Add: Distributed income from equity investees		290		1,466		1,521		2,591			7,730		4,449		1,804
		84,977		116,360		228,196		95,741			122,035		95,027		75,413
Fixed charges		237,389		294,060		570,646		492,093			371,667		344,363		356,617
Total Earnings	$	322,366	$	410,420	$	798,842	$	587,834		$	493,702	$	439,390	$	432,030
Fixed Charges
Interest credited to policyowners	$	220,245	$	279,168	$	538,622	$	464,022		$	341,575	$	312,008	$	325,941
Interest expense on debt		16,334		14,374		30,154		25,487			26,011		29,723		28,983
Amortization of debt issuance costs		464		374		1,137		985			3,155		1,833		1,538
Estimate of interest within rental expense		346		144		733		1,599			926		799		155
Total Combined Fixed Charges and Preference Security Dividends	$	237,389	$	294,060	$	570,646	$	492,093		$	371,667	$	344,363	$	356,617
Ratio of Earnings to Fixed Charges		1.36		1.40		1.40		1.19			1.33		1.28		1.21

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Roger K. Brooks, Chairman and Chief Executive Officer of AmerUs Group Co., certify that:

1.	I have reviewed this quarterly report on Form 10-Q of AmerUs Group Co.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	[Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986];
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 6, 2004

By	/s/ Roger K. Brooks
	Roger K. Brooks
	Chairman and
	Chief Executive Officer
	AmerUs Group Co.

46

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Melinda S. Urion, Executive Vice President, Chief Financial Officer and Treasurer of AmerUs Group Co., certify that:

1.	I have reviewed this quarterly report on Form 10-Q of AmerUs Group Co.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	[Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986];
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 6, 2004

By	/s/ Melinda S. Urion
	Melinda S. Urion
	Executive Vice President,
	Chief Financial Officer and Treasurer
	AmerUs Group Co.

47

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 1350 OF
CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE

For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Roger K. Brooks, the Chairman of the Board and Chief Executive Officer of AmerUs Group Co. (the Company), hereby certifies that:

(i)	the Quarterly report on Form 10-Q of the Company for the quarter ended June 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Roger K. Brooks

Roger K. Brooks
Chairman and Chief Executive Officer
AmerUs Group Co.

Dated: August 6, 2004

48

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO SECTION 1350 OF
CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE

For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Melinda S. Urion, the Executive Vice President, Chief Financial Officer and Treasurer of AmerUs Group Co. (the Company), hereby certifies that:

(i)	the Quarterly report on Form 10-Q of the Company for the quarter ended June 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Melinda S. Urion

Melinda S. Urion
Chief Financial Officer and Treasurer
AmerUs Group Co.

Dated: August 6, 2004

49