Exhibit 10(ii)(a)





August 23, 2000



Mr. Richard H. Booth
Chairman, President and Chief Executive Officer
HSB Group, Inc.
One State Street
Hartford, Connecticut   06102



Re:                $300,000,000 Convertible Capital Securities
Issuer:            HSB Capital II
Purchaser:         Employers Reinsurance Corporation and
                   ERC Life Reinsurance Corporation


Dear Mr. Booth;

On December 30, 1997 Employers Reinsurance  Corporation,  a Missouri Corporation
and ERC  Life  Reinsurance  Corporation,  a Kansas  Corporation,  (collectively,
"ERC"),  entered  into a Purchase  Agreement  with HSB  Capital  II, a statutory
business  trust created  under the business  Trust Act of the State of Delaware,
and HSB Group, Inc. a Connecticut  corporation,  for the purchase of Convertible
Capital  Securities  with  an  aggregate   liquidation  amount  of  $300,000,000
("Securities").  Such  Securities  were  invested  by  HSB  Capital  II in  7.0%
Convertible  Subordinated  Deferrable Interest  Debentures,  which were, in turn
issued pursuant to an Indenture  between HSB Group,  Inc. and the First National
Bank Of Chicago (the "Indenture").

Upon your request ERC is hereby providing you with this letter setting forth our
intentions  with regard to the  disposition  of the Securities in the event of a
change of control of the HSB Group, Inc.

ERC agrees to exercise its right of redemption as set out in Section 11.8 of the
Indenture upon the change of control of HSB Group,  Inc. It is  acknowledged  by
both parties  (which  acknowledgement  of HSB Group,  Inc. is  recognized by the
signature of an authorized  representative  of HSB Group, Inc. on a copy of this
letter) that the "change of control" of HSB Group,  Inc.  will be deemed to take
place when HSB has entered  into a binding  Letter of Intent or other  agreement
with another party for the ultimate change of control of HSB. ERC's agreement to
exercise  its right of  redemption  is premised  upon and  conditioned  upon the
following:

ERC must be paid the redemption price plus the redemption  premium,  for a total
of $315,000,000,  plus any accrued and unpaid  interest,  on or before September
16, 2000.

In the event that 50% or more of the voting  securities  of HSB Group,  Inc. are
transferred  to  another  party,  and  that  the  voting  securities  of HSB are
transferred  within  one year of the date of this  letter  or  would  have  been
transferred  but for the lack of  receipt  of final  regulatory  approval  which
regulatory  approval is ultimately  given with respect to that purchaser,  for a
price in excess of ERC's conversion price of $56.66/share (adjusted for the May,
1998 stock split from the original  conversion price of $85.00/share),  ERC will
receive the  difference  between its  conversion  price and the actual price per
share for which the sale was made, including fractional shares.


The failure of HSB Group,  Inc. to consummate this or any other transaction with
regard to the  transfer of the voting  securities  of HSB will not affect  ERC's
redemption, or the timing of the required payment, at the total redemption price
of $315,000,000  plus accrued and unpaid interest through and including the date
of redemption.

Any  expenses  incurred  by ERC in the  redemption  of its  Securities  shall be
indemnified by HSB Group, Inc. or the acquiring party.

HSB Group, Inc. will obtain regulatory or other approvals,  if any, necessary to
effectuate the redemption under the terms set out in this letter.

This letter shall serve as and take the place of any  notifications,  advance or
otherwise,  that are or might be required  under the Indenture for redemption of
the Securities.

HSB and ERC agree to enter into such  agreements  as will effect the transfer of
HSB's  membership  interest in HSB Industrial  Risk Insurers,  LLC to ERC and as
will effect the withdrawal of HSB from Industrial  Risk Insurers.  The effective
date of such  transfer and  withdrawal  shall be the date of  redemption  of the
Securities.

For each of the two annual  periods  commencing  January 1, 2001 and  January 1,
2002, HSB and ERC agree to enter into, or in the case of ERC to cause Industrial
Risk Insurers to enter into agreements under which HSB will provide  inspection,
engineering and mechanical breakdown services to Industrial Risk Insurers.  Each
of the  agreements  will be  substantially  in  accordance  with the  terms  and
conditions  set forth in  Schedule  II of the Joint  Agreement  with  respect to
Industrial  Risk Insurers date January 1, 2000 between  Industrial Risk Insurers
and the Hartford Steam Boiler Inspection and Insurance Company.  The Schedule II
terms may be modified to reflect changes in the Industrial Risk Insurers premium
volume and/or mix of business.  HSB agrees that Industrial Risk Insurers will be
allowed to issue "enabling"  policies (at Industrial Risk Insurers'  expense) as
necessary to allow HSB to provide mandatory state inspections.


It is the intent of ERC that its  agreement to redeem the  Securities as set out
in  this  letter  and  the  agreement  of  HSB  Group,  Inc.  to  satisfy  their
obligations,  shall be legally  binding  upon both parties and that either party
shall have the right to enforce the terms as set out herein,  but only if a copy
of this letter is signed by an authorized  representative of HSB Group, Inc. and
returned to ERC prior to August 26, 2000.


Employers Reinsurance Corporation


By: /s/ Kathryn Baker
Title:  Vice President, Associate General Counsel



Acknowledgment and Agreement of


HSB Group, Inc.


By: /s/ Robert C. Walker
Title:  Senior Vice President and General Counsel