Exhibit 10(iii)(a)


                                   As Amended and restated effective 1/1/98


                                 HSB GROUP, INC.
                            LONG-TERM INCENTIVE PLAN

1.        Purposes of Plan

          The purposes of this Plan are: (a) to provide an additional  incentive
          for Senior  Officers and other  selected key employees to increase the
          earnings  of the  Company on a  long-term  basis;  (b) to attract  and
          retain in the employ of the Company persons of outstanding  abilities;
          and (c) to more closely align the interests of the Senior Officers and
          other  selected key employees  with those of the  shareholders  of the
          Company.

2.        Definitions

          (a)  "Affiliate"  shall  have the  meaning  set  forth  in Rule  12b-2
               promulgated under Section 12 of the Exchange Act.

          (b)  "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
               under the Exchange Act.

          (c)  "Board" shall mean the Board of Directors of the Company.

          (d)  "Change  in  Control"  shall be  deemed to have  occurred  if the
               events  set forth in any one of the  following  paragraphs  shall
               have occurred:

               (i)  any Person is or becomes the Beneficial  Owner,  directly or
                    indirectly,  of securities of the Company (not  including in
                    the  securities   beneficially  owned  by  such  Person  any
                    securities   acquired  directly  from  the  Company  or  its
                    affiliates)  representing 25% or more of the combined voting
                    power  of  the  Company's   then   outstanding   securities,
                    excluding any Person who becomes such a Beneficial  Owner in
                    connection  with a  transaction  described  in clause (A) of
                    paragraph (iii) below; or

               (ii) the following individuals cease for any reason to constitute
                    a  majority  of  the  number  of  directors   then  serving:
                    individuals who, on December 23, 1996,  constitute 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 the Company)  whose  appointment or election by the Board
                    or nomination for election by the Company's shareholders 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  December  23,  1996  or  whose   appointment,
                    election  or  nomination  for  election  was  previously  so
                    approved or recommended; or

               (iii)there  is  consummated  a  merger  or  consolidation  of the
                    Company or any direct or indirect  subsidiary of the Company
                    with any  other  corporation,  other  than  (A) a merger  or
                    consolidation which would result in the voting securities of
                    the Company outstanding  immediately prior to such merger or
                    consolidation  continuing to represent  (either by remaining
                    outstanding or by being converted into voting  securities of
                    the surviving entity or any parent thereof),  in combination
                    with the ownership of any trustee or other fiduciary holding
                    securities  under an employee benefit plan of the Company or
                    any subsidiary of the Company,  at least 60% of the combined
                    voting  power  of the  securities  of the  Company  or  such
                    surviving   entity  or  any   parent   thereof   outstanding
                    immediately  after such  merger or  consolidation,  or (B) a
                    merger   or   consolidation    effected   to   implement   a
                    recapitalization of the Company (or similar  transaction) in
                    which no Person is or becomes the Beneficial Owner, directly
                    or  indirectly,  of securities of the Company (not including
                    in the  securities  Beneficially  Owned by such  Person  any
                    securities   acquired  directly  from  the  Company  or  its
                    Affiliates)  representing 25% or more of the combined voting
                    power of the Company's then outstanding securities; or

               (iv) the  shareholders  of the Company approve a plan of complete
                    liquidation  or  dissolution  of the  Company  or  there  is
                    consummated  an agreement for the sale or disposition by the
                    Company of all or substantially all of the Company's assets,
                    other than a sale or  disposition  by the  Company of all or
                    substantially  all of the Company's assets to an entity,  at
                    least  60% of  the  combined  voting  power  of  the  voting
                    securities of which are owned by shareholders of the Company
                    in substantially  the same proportions as their ownership of
                    the Company immediately prior to such sale.

                    Notwithstanding  the foregoing,  a "Change in Control" shall
                    not be deemed to have occurred by virtue of the consummation
                    of any  transaction  or  series of  integrated  transactions
                    immediately following which the record holders of the common
                    stock of the Company  immediately  prior to such transaction
                    or series of transactions continue to have substantially the
                    same proportionate  ownership in an entity which owns all or
                    substantially  all of the assets of the Company  immediately
                    following such transaction or series of transactions.

          (e)  "Code" shall mean the Internal Revenue Code of 1986, as amended.

          (f)  "Committee" shall mean the Human Resource  Committee of the Board
               or  any  future  committee  of  the  Board   performing   similar
               functions.

          (g)  "Company"  shall mean HSB Group,  Inc. and, except in determining
               under  this Plan  whether  or not any  Change in  Control  of the
               Company has occurred, shall include any successor to its business
               and/or  assets  which  assumes  this Plan by operation of law, or
               otherwise.

          (h)  "Disability"  shall mean any  condition  which  would  entitle an
               employee of the Company to receive  benefits  under the Company's
               Long-Term Disability Plan.

          (i)  "Dividend  Equivalent"  shall  mean an  amount  equal to the cash
               dividends  that would have been paid with  respect to an award of
               Performance   Contingent   Units  paid  hereunder  if  the  award
               constituted  Stock,  duly issued and  outstanding  on the date on
               which a dividend is payable on the Shares.

          (j)  "Exchange Act" shall mean the Securities Exchange Act of 1934, as
               amended.

          (k)  "Fair  Market  Value"  shall mean the average of the high and low
               prices per share of the  Company's  Shares as reported by the New
               York Stock Exchange Composite Transaction Reporting System (NYSE)
               on the date for which the Fair Market Value is being  determined,
               or if no quotations are available for the Company's  Shares,  for
               the next  preceding date for which such a quotation is available.
               If Company  Shares are not then  listed on the NYSE,  Fair Market
               Value shall be reasonably determined by the Committee in its sole
               discretion.

          (l)  "Participant"  shall mean an  employee  of the Company to whom an
               award has been made under the Plan.

          (m)  "Performance Contingent Award" shall mean an award of Performance
               Contingent Units.

          (n)  "Performance  Contingent Unit" shall mean the right to receive up
               to 100% of the value of Shares,  which  value may be paid in cash
               or a Stock Grant, as determined by the Committee, contingent upon
               the   achievement  of  Performance   Goals   established  by  the
               Committee.

          (o)  "Performance  Goals"  shall mean  specific  levels of one or more
               Performance  Measures at a corporate  and/or  business unit level
               established   in  writing  by  the  Committee  for  a  particular
               Performance Period.

          (p)  "Performance  Measures"  shall  mean  any  of  the  following:  

               - Insurance Combined Ratio
               - Expense Ratio
               - Net Income Per Share
               - Return on Equity 
               - Total Shareholder Return
               - Return on Assets
               - Revenues 
               - Operating Margin
               - Increase in Book Value
               - Market Share

          (q)  "Performance  Period"  shall mean a  three-year  period,  or such
               other  period  established  by the  Committee  during  which  any
               Performance  Goals  set  by  the  Committee  with  respect  to  a
               Performance Contingent Award are to be measured.

          (r)  "Person"  shall have the meaning given in Section  3(a)(9) of the
               Exchange  Act, as modified  and used in Sections  13(d) and 14(d)
               thereof,  except that such term shall not include (i) the Company
               or any of its  subsidiaries,  (ii) a trustee  or other  fiduciary
               holding  securities under an employee benefit plan of the Company
               or  any of  its  Affiliates,  (iii)  an  underwriter  temporarily
               holding securities pursuant to an offering of such securities, or
               (iv)  a  corporation  owned,  directly  or  indirectly,   by  the
               shareholders of the Company in substantially the same proportions
               as their ownership of stock of the Company.

          (s)  "Plan" shall mean the HSB Group, Inc. Long-Term Incentive Plan.

          (t)  "Retirement"  shall  mean the  termination  of  employment  under
               circumstances  which  entitle an employee  to receive  retirement
               benefits under the Company's Employees' Retirement Plan.

          (u)  "Shares" shall mean the Common Stock of the Company.

          (v)  "Stock  Grant"  shall  mean a grant  of  Shares  or of a right to
               receive  Shares (or their cash  equivalent  or a  combination  of
               both) in the future subject to such  conditions and  restrictions
               as the Committee shall determine at the time of grant.


3.        Administration of the Plan

          The Plan shall be  administered  by the  Committee as defined  herein.
          Each  member  of the  Committee  shall be a  "disinterested  director"
          within the meaning of Rule 16b-3 of the General Rules and  Regulations
          promulgated  under the Exchange Act and an "outside  director"  within
          the meaning of Section 162(m) of the Code. The Committee is authorized
          to interpret the Plan and shall adopt  guidelines for carrying out the
          Plan as it may deem  appropriate.  Such guidelines shall be consistent
          with the Plan and may  include,  but need not be limited  to, the size
          and terms of awards to be made and the  conditions for payment of such
          awards.  Decisions of the  Committee  shall be final,  conclusive  and
          binding upon all parties concerned,  unless otherwise  determined by a
          vote of a  majority  of the  disinterested  members  of the  Board  of
          Directors.

4.        Shares Subject To the Plan

          Subject to Section 9 of the Plan the maximum number of Shares that may
          be delivered to Participants  and their  beneficiaries  under the Plan
          shall be  250,000.  Any  Shares  covered  by a Stock  Grant  which are
          subsequently  forfeited,  withheld to cover tax withholding or settled
          in cash shall be deemed to have not been  delivered  for  purposes  of
          determining the maximum number of Shares  available for delivery under
          the Plan.


5.        Eligibility

          (a)  All Senior  Officers of the Company  (presently  defined as Chief
               Executive Officer,  President,  Executive Vice President,  Senior
               Vice President,  Corporate Secretary,  Treasurer, General Counsel
               and Chief Financial Officer) other than any individual  expressly
               excluded by the  Committee,  are eligible to  participate in this
               Plan.  An  individual  who is  elected  by the  Board as a Senior
               Officer following the commencement of a Performance Period shall,
               unless otherwise determined by the Committee,  be eligible for an
               award for such Performance  Period(s) based on such  individual's
               Base Salary in effect at the time of such election,  and prorated
               for the number of full months within such Performance Period that
               such individual was a Senior Officer.

          (b)  The Committee, in its sole discretion, may designate from time to
               time certain other officers or key employees of the Company,  its
               affiliates and subsidiaries who may participate in this Plan.

6.        Establishment of Performance Goals and Performance Contingent Awards

          (a)  Prior to or  within  ninety  days (or such  shorter  period as is
               required  under  Section  162(m)  of  the  Code)   following  the
               commencement  of each  Performance  Period,  the Committee  shall
               establish in writing for each Participant, or all Participants as
               a  group,  specific  Performance  Goals  based  on  one  or  more
               Performance Measures. For each Performance Goal an award schedule
               of Performance Contingent Units shall be established for minimum,
               target  and  maximum   attainment   of  such  goal.   The  actual
               Performance  Contingent  Award to be paid to a Participant at the
               conclusion of the Performance  Period shall be based on the level
               of  attainment  of the  Performance  Goals  established  for such
               period.  The Committee may designate that Performance  Contingent
               Awards shall be credited  with  Dividend  Equivalents  during the
               Performance  Period  which  shall be paid when and if such awards
               are paid.

          (b)  After Performance Goals have been established,  they shall not be
               modified  in  respect  to the  Performance  Period to which  they
               relate.

7.        Payment of Performance Contingent Awards and Dividend Equivalents

          (a)  Following the end of a Performance  Period,  the Committee  shall
               ascertain and certify in writing  whether and the degree to which
               the   Performance   Goals  for  such  period  have  been  met.  A
               Participant shall be entitled to receive payment of an amount not
               exceeding   the  Fair  Market  Value  of  the  maximum  award  of
               Performance   Contingent  Units   established  by  the  Committee
               pursuant to Section 6 hereof  based upon the level of  attainment
               of  the  Performance  Goals  determined  by  the  Committee.  The
               Committee  shall  have the  authority  to reduce the award of any
               Participant  even if the Performance  Goals  attributable to such
               award  have been  met.  The  Committee  shall  have no  authority
               hereunder  to  increase  any award  calculated  under  this Plan,
               except in accordance with Section 16.

          (b)  As soon as practicable  following  certification by the Committee
               pursuant to Section 7(a), payment of awards to Participants shall
               be  made.  Payments  shall be made in  cash,  a Stock  Grant or a
               combination  of the  foregoing as prescribed by the Committee and
               shall be subject to such other conditions and restrictions as the
               Committee shall establish.
         
          (c)  Payment of any award of Dividend Equivalents shall be made at the
               same time as payment of the Performance Contingent Award to which
               it  relates  and  shall  be made in  cash  or a  Stock  Grant  as
               prescribed by the Committee.

          (d)  The maximum aggregate Fair Market Value of Performance Contingent
               Units  (determined as of the first trading day of the Performance
               Period)  and  Dividend  Equivalents  which may be  awarded to any
               Participant  for any  Performance  Period  shall  not  exceed  $2
               million.

8.        Deferral of  Payment

          (a)  A  Participant  may, with  permission  of the Committee  elect to
               defer  receipt  of all or a  specified  part  of any  Performance
               Contingent  Award  and  related  Dividend  Equivalents.  Such  an
               election  shall be subject to such  terms and  conditions  as are
               prescribed by the Committee.  Deferral  elections are irrevocable
               and  must  be made  during  the  time  period  and in the  manner
               prescribed by the Committee.

          (b)  To the extent that the Committee,  in its discretion,  determines
               that the payment of a Performance  Contingent  Award would not be
               deductible by the Company pursuant to Section 162(m) of the Code,
               the  Committee  may defer  payment  of all or the  non-deductible
               portion of such award  until  such time as such  amount  would be
               deductible.  The terms and  conditions of any such deferral shall
               be prescribed by the Committee.

          (c)  The right of a Participant  to receive any unpaid  portion of any
               amount deferred hereunder shall be an unsecured claim against the
               general assets of the Company.

9.        Adjustments in the Event of Change in Common Stock of the Company

          In the event of any change in the  Shares of the  Company by reason of
          any stock  dividend,  stock split,  recapitalization,  reorganization,
          merger, consolidation,  split-up,  combination, or exchange of shares,
          or rights offering to purchase Shares at a price  substantially  below
          Fair Market Value, or of any similar change affecting the Shares,  the
          number of  Performance  Contingent  Units  awarded which have not been
          paid and the number of Shares  covered by a Stock Grant which have not
          been  delivered,  and the  number  of Shares  which  may be  delivered
          hereunder, shall be appropriately adjusted consistent with such change
          in such manner as the Board in its  discretion  may deem  equitable to
          prevent  substantial  dilution or enlargement of the awards and rights
          granted to, or available for  Participants  hereunder.  Any fractional
          shares resulting from such adjustments shall be eliminated.

10.       No Right to an Award or Continued Employment

          (a)  Nothing contained in this Plan or in any resolution adopted or to
               be adopted by the Board of Directors will constitute the granting
               of an award  hereunder.  The granting of an award pursuant to the
               Plan will take place only when  authorized by the  Committee.  No
               award and no rights of ownership  thereunder will be transferable
               otherwise  than  pursuant to Section 12.  There is no  obligation
               imposed  on  the  Committee   for   uniformity  of  treatment  of
               Participants under the Plan.

          (b)  Nothing in the Plan shall  interfere with or limit in any way the
               right of the Company to terminate any Participant's employment at
               any time, nor confer upon any  Participant  any right to continue
               in the employ of the Company.

11.       Rights on Termination of Employment

          (a)  If a Participant in this Plan shall terminate employment with the
               Company on account  of  Retirement  or  Disability  or  otherwise
               terminate  employment  with the  written  consent of the  Company
               prior to the expiration of any  Performance  Period(s) in respect
               of which such  Participant  may be eligible for an award, or if a
               subsidiary at which a Participant is employed shall cease to be a
               subsidiary  of  the  Company  prior  to  the  expiration  of  any
               Performance  Period(s),  the  award(s)  paid to such  Participant
               shall be prorated according to the number of months of employment
               in each such Performance Period.

          (b)  A Participant  whose  employment  terminates by dismissal with or
               without cause, or who voluntarily  terminates  employment without
               consent prior to the  expiration of a Performance  Period,  shall
               lose any right to receive payment of such award.

          (c)  In no event  shall an award or a portion  thereof  the payment of
               which has been  deferred  pursuant  to  Section 8 be  subject  to
               forfeiture.

12.       Death of a Participant

          (a)  A  Participant  may file  with  the  Corporate  Secretary  of the
               Company a designation  of a beneficiary or  beneficiaries  on the
               appropriate  form, which designation may be changed or revoked by
               the  Participant's  sole  action,  provided  that the  change  or
               revocation is filed with the Corporate Secretary.  In case of the
               death  of  the  Participant,   before  or  after  termination  of
               employment, any earned but unpaid portion of an award to which he
               or she is  entitled  and  any  deferred  portions  of a  deceased
               Participant's  award shall be  delivered  to the  beneficiary  or
               beneficiaries  so  designated  or,  if no  beneficiary  has  been
               designated or survives such  Participant,  shall be delivered to,
               or  in  accordance  with  the  directions  of,  the  executor  or
               administrator of such Participant's estate.

          (b)  If a  Participant  shall die during a  Performance  Period,  such
               Participant's  beneficiary  shall only be entitled to receive the
               award declared for the  Performance  Period ending in the year of
               the Participant's death.

13.       Tax Withholding

          The Company shall have the right to require  Participants  to remit to
          the  Company  an amount  sufficient  to  satisfy  any tax  withholding
          requirements  or to deduct from any payments made pursuant to the Plan
          amounts sufficient to satisfy tax withholding requirements.

14.       Modification or Termination

          (a)  The  Committee  may at any time  terminate  or from  time to time
               modify or suspend, and if suspended,  may reinstate any or all of
               the  provisions  of this  Plan,  subject to any  requirement  for
               shareholder  approval  imposed by applicable  law, except that no
               modification of this Plan may be made which will adversely affect
               any rights or obligations with respect to any awards  theretofore
               made under the Plan.

          (b)  The  Corporate  Secretary of the Company  shall be  authorized to
               make  minor or  administrative  changes  in the  Plan or  changes
               required by or made desirable by law or government regulation.


15.       Change in Control

          (a)  In the event of a Change in  Control  of the  Company,  this Plan
               shall  continue to be binding upon the Company,  any successor in
               interest to the Company and all persons in control of the Company
               or  any  successor  thereto,  and no  transaction  or  series  of
               transactions  shall have the effect of reducing or canceling  the
               award of a Participant that has been declared but not paid unless
               consented to in writing by such affected Participant.

          (b)  As  soon  as  practicable   following  a  Change  in  Control,  a
               Participant  shall be paid a lump sum amount in cash equal to the
               aggregate value of the Performance  Contingent  Awards payable to
               the Participant for each of the Performance  Periods within which
               the date of the Change in Control  occurs,  calculated as to each
               such  Performance  Period  by  multiplying  the  award  that  the
               Participant would have earned on the last day of such Performance
               Period, assuming the achievement of each of the Performance Goals
               at the target level  established for such Performance  Period, by
               the  fraction  obtained by dividing the number of full months and
               any fractional  portion of a month during such Performance Period
               prior to the  Change in  Control  by the  total  number of months
               contained  in  such  Performance  Period.  For  purposes  of  the
               preceding  sentence,  the amount of cash  delivered in payment of
               the value of the  Performance  Contingent  Awards shall equal the
               number of Performance  Contingent  Units  constituting  such each
               such award  multiplied  by the  greater of (i) the  highest  Fair
               Market  Value per share of Stock at any time  during  the  60-day
               period  preceding  the Change in Control and (ii) if  applicable,
               the price of a Share which is paid or offered to be paid,  by any
               person or entity, in connection with the transaction constituting
               the Change in Control. The amount paid hereunder shall be in lieu
               of any other awards  payable under this Plan for the  Performance
               Periods within which the Change in Control occurs.

          (c)  Upon  a  Change  in  Control,   the   restrictions  and  deferral
               limitations  applicable  to any  Stock  Grant  made  pursuant  to
               Section 7 hereunder  shall lapse as of the date of such Change in
               Control.

          (d)  As soon as practicable  following a Change in Control, any awards
               or Dividend  Equivalents  previously  deferred in accordance with
               Section 8 hereof, plus interest accrued thereon up until the date
               of payment, shall be paid in full.

16.       Other Plans and Special Awards

          (a)  Nothing  contained in this Plan shall  prohibit the  Committee or
               the  Board  from  granting  other  awards or  establishing  other
               incentive   compensation  plans  providing  for  the  payment  of
               incentive compensation to employees, including Participants.

          (b)  Notwithstanding  Section 6 and the  intention of the Committee to
               maintain tax deductibility of awards granted  hereunder  pursuant
               to Section 162(m) of the Code,  the Committee  reserves the right
               to grant  awards  which do not meet the  requirements  of Section
               162(m) as to deductibility (for example, awards based on measures
               other than Performance  Measures or not established in accordance
               with  Section 6 ) in order to  recognize  unanticipated  business
               conditions  or events  which have,  or are  expected  to have,  a
               significant effect on the Company.

17.       Unfunded Obligations; Trust Agreement

          (a)  The  Company  will pay from its  general  assets all awards to be
               made  hereunder.  However,  the  Company  may in its  discretion,
               establish a trust,  escrow  agreement or similar  arrangement  in
               order to aid the Company in meeting its obligations hereunder.

          (b)  Any assets  transferred by the Company into any such  arrangement
               shall  remain at all times  assets of the  Company and subject to
               the claims of the  Company's  general  creditors  in the event of
               bankruptcy or insolvency of the Company.  No security interest in
               such  assets  shall be  created  in a  Participant's  favor and a
               Participant's   rights   under  this  Plan  and  under  any  such
               arrangement shall be those of a general unsecured creditor of the
               Company.

18.       Assignment and Alienation

          Benefits under this Plan may not be anticipated,  assigned  (either at
          law or in equity), alienated, or subjected to attachment, garnishment,
          levy,   execution  or  other  legal  or  equitable  process.   If  any
          Participant  or  beneficiary  under  this  Plan  becomes  bankrupt  or
          attempts to anticipate,  alienate,  sell,  transfer,  assign,  pledge,
          encumber or charge any benefit under this Plan, such benefit shall, in
          the discretion of the Committee,  cease and terminate,  in which event
          the  Committee  may hold or apply the same or any part thereof for the
          benefit of such Participant, his or her beneficiary, spouse, children,
          other  dependents  or any of such  individuals,  in such manner and in
          such proportion as the Committee may deem proper.

19.       Effective Date and Termination of the Plan

          This Plan,  as amended,  shall become  effective as of January 1, 1998
          subject to the approval of the shareholders at their annual meeting in
          1998.  Unless earlier  terminated by the Committee  subject to Section
          14, the Plan shall  terminate  on December 31,  2003.  No  Performance
          Contingent  Award  shall  be made  pursuant  to this  Plan  after  the
          termination  date, but awards made prior to its  termination  date may
          extend beyond that date.