Filed by American International Group, Inc.
                              Pursuant Rule 425 under the Securities Act of 1933

                              Subject Company : HSB Group, Inc.
                              Commission File No.: 001-13135

NEWS                               [AIG LOGO] American International Group, Inc.
                                               70 Pine Street New York, NY 10270

Contact:  Joe Norton (News Media)
          Director of Public Relations

          Charlene Hamrah (Investment Community)
          Director of Investor Relations

                       AIG TO ACQUIRE HSB GROUP, INC. FOR


NEW YORK and HARTFORD, August 18, 2000 - American International Group, Inc.
(NYSE: AIG) and HSB Group, Inc. (NYSE: HSB) have announced that they have
entered into a definitive agreement whereby AIG will acquire 100 percent of the
outstanding stock of HSB Group, Inc. HSB stockholders will receive AIG common
stock (or in certain circumstances at the option of AIG, AIG common stock and
cash) with a value equal to $41.00 for each share of HSB common stock. The total
value for the transaction is approximately $1.2 billion.

         The transaction has been approved by the Boards of Directors of both
companies, and is subject to various regulatory approvals, as well as the
approval of HSB stockholders. The parties expect that the transaction will be
able to close later this year or early next year. In connection with the
agreement, HSB has issued to AIG an option to purchase up to 19.9 percent of its
common stock under certain conditions.

         The transaction will be treated as a purchase for accounting purposes.
It is anticipated that the transaction will qualify as a tax-free reorganization
for federal income tax purposes.

         Commenting on the agreement, AIG Chairman M. R. Greenberg said, "We are
very pleased to have reached this agreement to acquire HSB Group, a fine
organization that, through its subsidiary, Hartford Steam Boiler Inspection and
Insurance Company, provides specialty insurance coverages that complement AIG's
insurance products. Hartford Steam Boiler is the largest insurance company in
the United States providing these specialty property coverages and has, over the
years, produced excellent underwriting results with an outstanding reputation
for product and service quality. Hartford Steam Boiler will operate as a
stand-alone company with its management team remaining in place.

         "As part of AIG, Hartford Steam Boiler will be able to take advantage
of AIG's relationships and global network to build its business of specialized
insurance and inspection services. Overseas, AIG should be able to open
significant new opportunities for Hartford Steam Boiler. It is anticipated that
it will be slightly accretive to the earnings of AIG in 2001. We look forward to
working with HSB's management team in the future," said Mr. Greenberg.

         "Our affiliation with AIG provides significant opportunities for HSB's
people and businesses. This transaction permits HSB to leverage the enormous
financial strength, market position and international reach of AIG," said
Richard H. Booth, HSB Chairman, President and Chief Executive Officer.

Page two
August 18, 2000

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         AIG is the leading U.S.-based international insurance and financial
services organization and the largest underwriter of commercial and industrial
insurance in the United States. Its member companies write a wide range of
commercial and personal insurance products through a variety of distribution
channels in approximately 130 countries and jurisdictions throughout the world.
AIG's global businesses also include financial services and asset management,
including aircraft leasing, financial products, trading and market making,
consumer finance, institutional, retail and direct investment fund asset
management, real estate investment management, and retirement savings products.
American International Group, Inc.'s common stock is listed on the New York
Stock Exchange, as well as the stock exchanges in London, Paris, Switzerland and

         HSB Group, Inc., the parent company of The Hartford Steam Boiler
Inspection and Insurance Company, is a global provider of specialty insurance
products, engineering services, and management consulting. The Hartford Steam
Boiler Inspection and Insurance Company was founded in 1866 to provide loss
prevention service and insurance to businesses, industries and institutions. For
more information about HSB, visit its web site at www.hsb.com.

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         This press release contains forward-looking statements. These
forward-looking statements are found in various places throughout this press
release and include, without limitation, statements concerning the financial
conditions, results of operations and businesses of AIG and HSB and, assuming
the consummation of the acquisition, the consolidation of HSB into AIG, as well
as the expected timing and benefits of the acquisition. While these
forward-looking statements represent our judgments and future expectations
concerning the development of our business and the timing and benefits of the
acquisition, a number of risks, uncertainties and other important factors could
cause actual developments and results to differ materially from our
expectations. These factors include, but are not limited to, those listed in
AIG's 1999 Annual Report on Form 10-K and HSB's 1999 Annual Report on Form 10-K,
as well as the failure of the HSB stockholders to approve the transaction; the
risk that the HSB business will not be successfully integrated into AIG; the
costs related to the transaction; the inability to obtain or meet conditions
imposed for governmental approvals for the transaction; the risk that
anticipated synergies will not be obtained or not obtained within the time
anticipated; and other key factors that we have indicated could adversely affect
our businesses and financial performance contained in our past and future
filings and reports, including those with the United States Securities and
Exchange Commission (the "SEC").

         More detailed information about those factors is set forth in filings
made by AIG and HSB with the SEC. Neither AIG nor HSB is under any obligation to
(and expressly disclaims any such obligations to) update or alter its
forward-looking statements whether as a result of new information, future events
or otherwise.

Page three
August 18, 2000


         AIG and HSB will be filing a proxy statement/prospectus and other
relevant documents concerning the acquisition with the SEC. WE URGE INVESTORS TO
to obtain the documents free of charge at the SEC's website, www.sec.gov. In
addition, documents filed with the SEC by AIG will be available free of charge
from AIG, 70 Pine Street, New York, New York 10270, Attention: Director of
Investor Relations. Documents filed with the SEC by HSB will be available free
of charge from HSB, One State Street, P. O. Box 5024, Hartford, Connecticut
06102, Attention: James C. Rowan, Jr.

         HSB and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the security holders of HSB in
favor of the acquisition. The directors and executive officers of HSB include
the following: R.H. Booth, S.L. Basch, M.L. Downs, J.J. Kelley, W.A. Kerr, N.
Mercier, R.K. Price, W. Stockdale, R.C. Walker, W.B. Ellis, E.J. Ferland, H.H.
Fore, C.G. Campbell, S.W. Leathes, J.B. Alvord, R.G. Dooley and L.D. Rice.
Collectively, as of March 10, 2000, the directors and executive officers of HSB
may be deemed to beneficially own approximately 5.5% of the outstanding shares
of HSB common stock. Security holders of HSB may obtain additional information
regarding the interests of such participants by reading the proxy
statement/prospectus when it becomes available.

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