Exhibit 10(iii)(b) 
                
                           As amended and restated effective September 21, 1998

       THE HSB GROUP, INC. DIRECTORS STOCK AND DEFERRED COMPENSATION PLAN


1.   Purposes of the Plan.

     The  purposes  of  The  HSB  Group,  Inc.   Directors  Stock  and  Deferred
     Compensation  Plan are:  (a) to attract  and  retain  persons of ability as
     directors of the Company;  (b) to more closely align  directors'  interests
     with those of  shareholders;  and (c) to  encourage  the  highest  level of
     contribution  by  directors  to the  financial  success  of the  Company by
     providing a significant portion of their compensation in the form of equity
     in the Company.


2.   Definitions.

     "Annual  Award"  shall mean the annual award made to a Director of Deferred
     Shares.

     "Board" shall mean the Board of Directors of the Company.

     "Cash  Compensation"  shall mean the total of the annual cash  retainer and
     fees for attending  and/or chairing any meeting of the Board or a committee
     of the Board payable to a Director for any Plan Year.

     "Change in Control" shall have occurred for purposes of this Plan if :

          (a)  any  "person"  (as  defined  in  Sections  13(d) and 14(d) of the
               Securities  Exchange  Act of  1934,  as  amended  (the  "Exchange
               Act")),   other  than  a  trustee  or  other  fiduciary   holding
               securities under an employee  benefit plan of the Company,  is or
               becomes  the  "beneficial  owner" (as defined in Rule 13d-3 under
               the Exchange Act),  directly or indirectly,  of securities of the
               Company  representing  twenty-five (25%) or more of the Company's
               then outstanding securities;

          (b)  during any period  within two (2)  consecutive  years there shall
               cease to be a majority  of the Board of  Directors  comprised  as
               follows:   individuals  who  at  the  beginning  of  such  period
               constitute the Board of Directors and any new  director(s)  whose
               election by the Board of Directors or nomination  for election by
               the  Company's  shareholders  was  approved by a vote of at least
               two-thirds (2/3) of the directors then still in office who either
               were  directors at the beginning of the period or whose  election
               or nomination for election was previously so approved; or

          (c)  the shareholders of the Company approve a merger or consolidation
               of the  Company  with any  other  corporation,  other  than (i) a
               merger  or  consolidation   which  would  result  in  the  voting
               securities of the Company  outstanding  immediately prior thereto
               continuing to represent  (either by remaining  outstanding  or by
               being converted into voting  securities of the surviving  entity)
               more than 80% of the combined  voting power of voting  securities
               after  such  merger  or   consolidation   or  (ii)  a  merger  or
               consolidation  effected to  implement a  recapitalization  of the
               Company  (or  similar  transaction)  in  which  no  "person"  (as
               hereinabove  defined)  acquires  more  than  25% of the  combined
               voting power of the Company's then outstanding securities; or

          (d)  the  shareholders  of the Company  approve (i) a plan of complete
               liquidation of the Company or (ii) the sale or other  disposition
               of all or substantially all the Company assets.

     "Committee" shall mean the Governance  Committee of the Board or any future
     committee of the Board performing similar functions.

     "Company" shall mean HSB Group, Inc.

     "Deferral  Election"  shall  mean the  election  to defer  receipt  of Cash
     Compensation in accordance with Section 7.

     "Deferred Account" shall mean the account  established and maintained for a
     Director under the Plan pursuant to an election made pursuant to Section 7.

     "Deferred Share" shall mean the right to receive the Fair Market Value of a
     share of Stock in the form of Stock subject to the  conditions set forth in
     the Plan.

     "Director" shall mean a non-employee director of the Company.

     "Dividend Equivalent" shall mean an amount equal to the dividend that would
     have  been  paid  with  respect  to a  Deferred  Share  if  such  unit  had
     constituted  a share of Stock,  duly issued and  outstanding  on the date a
     dividend is payable on the Stock.

     "Fair  Market  Value" shall mean the average of the high and low prices per
     share of the  Company's  Stock 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  Stock,  for the next  preceding  date for which  such a
     quotation is  available.  If shares of Company Stock are not then listed on
     the NYSE, Fair Market Value shall be reasonably determined by the Committee
     in its sole discretion.

     "Plan"  shall  mean  The HSB  Group,  Inc.  Directors  Stock  and  Deferred
     Compensation Plan.

     "Plan Year" shall mean the calendar year.


     "Stock" shall mean the common stock of the Company.


3.   Administration of the Plan.

     The Plan shall be  administered  by the  Committee as defined  herein.  The
     Committee is authorized  to interpret  the Plan and shall adopt  guidelines
     for  carrying  out the Plan as it may deem  appropriate.  Decisions  of the
     Committee  shall  be  final,   conclusive  and  binding  upon  all  parties
     concerned, unless otherwise determined by the Board of Directors.


4.   Stock Subject to the Plan.

     Subject to the  provisions of Section 11 of the Plan, the maximum number of
     shares of Stock which may be delivered to Directors under the Plan shall be
     150,000.  Any shares of Stock  withheld to cover tax  withholding  shall be
     deemed to have not been delivered for purposes of  determining  the maximum
     number of shares of Stock available for delivery under the Plan.


5.   Annual Awards

     Annual Awards shall be made in the form of Deferred  Shares  subject to the
     provisions of Article 6.


6.   Award of Deferred Shares.

     As of the last day of each Plan Year, an award of Deferred  Shares shall be
     made to each  Director in an amount equal to 825  multiplied  by a fraction
     where the  numerator  is the number of full or partial  months  within such
     Plan Year that such individual  served as a Director and the denominator is
     12. In the event that such Director's  service on the Board  terminates for
     any  reason  prior  to the end of the  Plan  Year,  as soon as  practicable
     following  such  termination  such  Director's  award will be determined in
     accordance with the formula in the preceding sentence but as of the date of
     such Director's termination.


7.   Election to Defer Receipt of Cash Compensation.

     (a)  A Director shall have the right to make on an annual basis an election
          to  defer  payment  of  all,  or  a  percentage  of,  the  total  Cash
          Compensation  to be earned  during the ensuing  Plan Year (a "Deferral
          Election").  In order to make a  Deferral  Election  pursuant  to this
          Section 7, a Director shall deliver to the Corporate  Secretary of the
          Company no later than the last business day prior to the  commencement
          of the first Plan Year to which such election relates a written notice
          setting forth the percentage of Cash  Compensation  to be deferred and
          whether  such cash should be (i)  converted  into  Deferred  Shares in
          accordance  with  subsection (b) below;  or (ii) credited as cash to a
          Deferred  Account  maintained  for  such  Director  on the  date  such
          compensation would otherwise be paid. Individuals who become Directors
          during a Plan Year shall have thirty days following  their election or
          appointment to make a Deferral  Election for the remainder of the Plan
          Year.  Any  Deferral  Election  made  pursuant to this Section 7 shall
          remain in effect for  subsequent  Plan Years until a new election form
          is  delivered  to the  Corporate  Secretary  in  accordance  with this
          section.

     (b)  As soon as practicable following the end of a Plan Year, each Director
          who made a Deferral  Election in the form of  Deferred  Shares will be
          credited  as of the last  day of the Plan  Year  with  the  number  of
          Deferred Share units, including fractional Deferred Share units, equal
          to the amount of the Cash Compensation,  the payment of which has been
          deferred,  divided by the Fair Market  Value of shares of Stock on the
          date such  compensation  would  otherwise have been paid. In the event
          that a Director's service on the Board terminates for any reason prior
          to  the  end  of a  Plan  Year,  the  calculation  referred  to in the
          preceding sentence shall be made as soon as practicable following such
          Director's date of termination.


8.   Dividend  Equivalents  Payable  on  Deferred  Shares and  Interest  Paid on
     Deferred Cash Accounts.

     (a)  Dividend  Equivalents  shall be credited  on  Deferred  Shares held by
          Directors  based upon  dividends  paid on shares of Stock  between the
          date such Deferred  Shares are credited to Directors and the date they
          are ultimately paid out in accordance with the Plan.

     (b)  Dividend Equivalents shall, at the election of the Director, be either
          (i) paid in the form of cash as soon as practicable  following the end
          of a Plan Year; or (ii) converted into Deferred  Shares  following the
          end of a Plan Year based on the number of Deferred  Shares credited to
          a Director's  account as of the dividend  record dates falling  within
          such Plan Year multiplied by the Dividend  Equivalent amount per share
          of Stock  payable  during  such Plan Year  divided by the Fair  Market
          Value of Stock on the last day of the Plan Year.

     (c)  Dividend  Equivalents will be payable on Deferred Shares granted under
          Section 6 for the Plan  Year for  which a grant is made in  accordance
          with  subsections (a) and (b) above as though such Deferred Shares had
          been granted as of the first day of such Plan Year,  provided however,
          such Dividend  Equivalents  shall not be credited to a Director  until
          the Deferred  Shares to which they relate are credited to the Director
          in accordance with Section 6.

     (d)  Dividend  Equivalents  will be payable  on  Deferred  Shares  credited
          pursuant to a Deferral  Election  pursuant to Section 7 in  accordance
          with  subsections (a) and (b) above as though such Deferred Shares had
          been credited to a Director on the date the Cash Compensation to which
          the Deferral Election relates would otherwise have been paid, provided
          however,  such  Dividend  Equivalents  shall  not  be  credited  to  a
          Director's  account until the Deferred Shares to which they relate are
          credited to the Director in accordance with Section 7.

     (e)  At the end of each  Plan  Year,  and at the  time  of  payment  of any
          amounts held in a Deferred Account, interest at the rate of 8.5% shall
          be credited to each Deferred Account on the average daily balance held
          in such accounts for the preceding Plan Year or portion thereof.


9.   Time and Form of Payment.

     (a)  Payment in  settlement  of Deferred  Shares and any amounts  held in a
          Deferred  Account will commence as soon as practicable  after the date
          the Director ceases to be a member of the Board,  unless, with respect
          to amounts held in a Deferred  Account,  a Director  has  specified an
          alternate date in his or her Deferral Election.

     (b)  Payment in  settlement  of Deferred  Shares and any amounts  held in a
          Deferred  Account  will be made in a lump  sum  or,  if  elected  by a
          Director at least one year prior to the date such  Director  ceases to
          be a member of the Board, in a specified number (not to exceed ten) of
          annual  installments.  Such election may be modified or revoked by the
          Director,  provided that no such  modification  or revocation  will be
          given  effect  unless it is made  prior to the date  specified  in the
          preceding sentence.

     (c)  Amounts  held in a Deferred  Account in the form of cash shall be paid
          out in cash and Deferred Shares held by a Director shall be paid in an
          equivalent number of shares of Stock.


     (d)  Whenever a fractional  share would  otherwise be required to be issued
          in accordance  with the terms of this Section 9, the Fair Market Value
          of such fractional share shall be paid in cash.


10.  Payment in the Event of Death.

     (a)  In the event of a  Director's  death,  payment of amounts  credited to
          such Director's  Deferred Account shall be paid in cash and payment of
          Deferred  Shares  shall be made in  shares of  Stock,  except  for any
          fractional share the Fair Market Value of which shall be paid in cash.

     (b)  Payment  shall be made as soon as  practicable  following the death of
          the  Director in a single lump sum to the  beneficiary  designated  in
          writing by the Director,  of if no designation was made, to the person
          legally  entitled  thereto,  as  designated  under  the  will  of  the
          Director,  or to such  heir or heirs as  determined  under the laws of
          intestacy of the Director's domicile.


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

     In the event  that  there is any change in the Stock by reason of any stock
     dividend,  stock split, combination of shares, exchange of shares, warrants
     or rights  offering  to  purchase  Stock at a price  below its fair  market
     value, reclassification,  recapitalization, merger, consolidation, spin-off
     or other change in capitalization,  appropriate adjustment shall be made in
     the number and kind of shares or other property subject to the Plan and the
     number and kind of shares or other property credited to the Directors under
     the Plan, and any other  relevant  provisions of the Plan by the Committee,
     whose determination shall be binding and conclusive on all persons.


12.  Change in Control.

     In the event of a Change in Control,  the following shall occur on the date
     thereof  (the  "Change  in  Control  Date"):  (i) the  last day of the then
     current  Plan Year shall be deemed to occur on the Change in Control  Date;
     (ii)  pursuant to Sections 5, 6, and 7,  Directors  shall be credited  with
     Deferred  Shares,  as if for this purpose  Directors'  service as Directors
     ceased  on the  Change in  Control  Date;  (iii)  Dividend  Equivalents  on
     Deferred  Shares,  including those credited under clause (ii), and interest
     on any Deferred  Accounts  shall be credited in accordance  with Section 8;
     and (iv) the Company shall pay a lump sum cash payment in settlement of the
     amount of cash credited to each Director's  Deferred Account and the number
     of Deferred  Shares  then  credited to such  Director,  including  cash and
     Deferred  Shares  credited  pursuant to clauses (ii) and (iii)  above.  For
     purposes of the preceding sentence, the amount of cash delivered in payment
     of Deferred Shares shall equal such units  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  of Stock  which  is paid or  offered  to be paid,  by any
     person or entity,  in  connection  with the  transaction  constituting  the
     Change in Control.


13.  Rights with respect to Deferred Shares.

     Except to the extent  otherwise set forth in the Plan,  Directors shall not
     have any of the rights of a shareholder with respect to the Deferred Shares
     credited to them.


14.  General Restrictions.

     (a)  No shares of Stock shall be issued under the Plan prior to  compliance
          by  the  Company,  to  the  satisfaction  of  its  counsel,  with  any
          applicable  law. The Company shall not be obligated to, but may in its
          discretion,  take any  action  under  applicable  federal or state law
          (including  registration  or  qualification  of the Plan or the Stock)
          necessary for compliance  therewith in order to permit the issuance of
          shares hereunder.

     (b)  The  Company  may  impose  such  restrictions  on the  sale  or  other
          disposition  of  shares  of Stock  issued  under  the Plan as it deems
          necessary to comply with applicable securities laws.


15.  Withholding.

     The Company may defer  making  payment or delivery of shares of Stock under
     the Plan until satisfactory  arrangements have been made for the payment of
     any  Federal,  state or local  income  taxes  required to be withheld  with
     respect to such payment or delivery,  including  without  limitation by the
     withholding of shares that would otherwise be so delivered,  by withholding
     from any other  payment due to the  Director,  or by a cash  payment to the
     Company by a Director.


16.  No Right to Nomination for Reelection.

     Nothing in the Plan shall be deemed to create any obligation on the part of
     the  Board  to  nominate  any  Director  for  reelection  by the  Company's
     shareholders  or to limit the  rights  of the  shareholders  to remove  any
     Director.


17.  Amendment and Termination of the Plan.

     The Board may at any time amend or terminate the Plan, in whole or in part,
     however, no amendment or termination shall without the written consent of a
     Director,  reduce the Director's  rights with respect to awards  previously
     granted  hereunder or any fees  previously  earned the payment of which has
     been deferred pursuant to the terms of the Plan.


18.  Governing Law.

     The Plan and all actions taken  thereunder shall be construed in accordance
     with and governed by the laws of the State of Connecticut.