EXHIBIT 10 (g)


 August 6, 2001


 Mr. David E. Chamberlain, CPCU
 Vice President, Treaty Underwriting
 Dorinco Reinsurance Company
 1320 Waldo Avenue, Suite 200
 Midland, MI 48642


 Re:  Hallmark Financial Services, Inc. & Dorinco Reinsurance Company
      Term Letter
      Effective: July 1, 2001

 Dear Linda and Dave:

 The purpose of this letter is to memorialize several items which  supplement
 various existing agreements between  the parties.   The following items  are
 hereby agreed:

 1. Effective  July 1,  2001, and  continuing without  interruption until the
   termination  or  expiration of  the  Quota  Share  Retrocession  Agreement
   currently   in  effect   between  American   Hallmark  Insurance   Company
   ("American  Hallmark")   and  Dorinco  Reinsurance  Company   ("Dorinco"),
   American  Hallmark shall  maintain a  surplus, as  in the  event  American
   Hallmark's  surplus,  so  defined, shall  at  any  such  time  fall  below
   $5,600,000, then,  Hallmark Financial  Services, Inc.  (HFS) will  either,
   within  fifteen  (15)  days after  such  event,  make  a  contribution  to
   American Hallmark's  surplus sufficient to increase  it to $5,600,000  or,
   within thirty (30)  days after such event, provide  to or for the  benefit
   and enjoyment of Dorinco collateral in a form acceptable to Dorinco in  an
   amount  equal to  100%  of  American Hallmark's  reserves  on  outstanding
   liabilities to  State & County Mutual  Fire Insurance Company ("State  and
   County") on business American  Hallmark has reinsured or may reinsure  for
   State &  County and  has not  retroceded and  does not  retrocede to  such
   Quota Share  Retrocession Agreement.  In  the event collateral  acceptable
   to Dorinco  is not delivered  within such thirty  days, Dorinco may  force
   the immediate cancellation  of the Quota Share Retrocession Agreement  and
   any other contracts which  Dorinco may have with either American  Hallmark
   or  American Hallmark  General Agency,  Inc., as  well as  all  underlying
   contracts issued by  either of them which have been  or could be ceded  to
   the Quota Share Retrocession  Agreement, and, in addition thereto, may  at
   its option implement  an immediate seventy-five percent (75%) increase  in
   premium under the Quota Share Retrocession Agreement.

 2. In addition to  and not  in  lieu of  Dorinco's  rights as  described  in
   paragraph one above,  effective April 1, 2001,  if, at any time,  American
   Hallmark's surplus,  as reported  in its  statutory financial  statements,
   drops below  $4,000,000, Dorinco may force  the immediate cancellation  of
   the  Quota Share  Retrocession Agreement  and  any other  contracts  which
   Dorinco  may have  with  either  American Hallmark  or  American  Hallmark
   General  Agency, Inc.,  as  well as  all  underlying contracts  issued  by
   either  of them  which have  been or  could be  ceded to  the Quota  Share
   Retrocession  Agreement,  and,  in  addition  thereto, may  at  its option
   implement  an immediate seventy-five percent  (75%)  increase  in  premium
   under the Quota Share Retrocession Agreement.

 3. In the event Linda H. Sleeper is no longer employed by American Hallmark,
   for reasons  other than her death  or serious injury/illness, Dorinco  may
   force  the  immediate   cancellation  of  the  Quota  Share   Retrocession
   Agreement  and any  other contracts  which Dorinco  may have  with  either
   American Hallmark  or American Hallmark General  Agency, Inc., as well  as
   all  underlying contracts  issued by  either of  them which  have been  or
   could  be  ceded  to the  Quota  Share  Retrocession  Agreement,  and,  in
   addition thereto, may at its option, implement an immediate fifty  percent
   (50%) increase  in premium under the  Quota Share Retrocession  Agreement.
   In the event Linda H. Sleeper  is no longer employed by American  Hallmark
   because of  her death  or serious  injury/illness, Dorinco  may force  the
   immediate cancellation of  the Quota Share Retrocession Agreement and  any
   contracts which  Dorinco may have with  American Hallmark General  Agency,
   Inc., as  well as  all underlying  contracts issued  by American  Hallmark
   General Agency,  Inc., which  have been  or could  be ceded  to the  Quota
   Share  Retrocession  Agreement,  and,  in  addition,  may  at  its  option
   implement a fifty percent (50%) increase in premium under the Quota  Share
   Retrocession Agreement, such  increase to be effective within ninety  (90)
   days.

 4. In  the  event  that  Dorinco  elects   to  terminate  the  Quota   Share
   Retrocession Agreement  pursuant to paragraphs  one, two  or three  above,
   HFS shall, within thirty (30) days after receipt by HFS of such notice  of
   termination,  provide to  or  for the  benefit  and enjoyment  of  Dorinco
   collateral in a form acceptable to  Dorinco in an amount equal to 100%  of
   American Hallmark's reserves on outstanding liabilities to State &  County
   on business American  Hallmark has reinsured or  may reinsure for State  &
   County and has not retroceded and  does not retrocede to such Quota  Share
   Retrocession Agreement.

   (For purposes  of this Agreement, acceptable  collateral to Dorinco  shall
   consist of  either a Clean Evergreen  Irrevocable Letter of Credit,  cash,
   or cash equivalents.   In the event HFS uses  cash or cash equivalents  to
   satisfy a  collateral requirement, all  investment income  will accrue  to
   HFS.    In  addition,  said  collateral  would  include  any  Loss,   Loss
   Adjustment Expenses  including unallocated, Unearned  Premium Reserve  and
   Incurred but Not Reported losses  on the State & County business  retained
   by American Hallmark.)

 5. Dorinco shall have the option, at July  1, 2001, to maintain its  current
   one hundred percent  (100%) participation in the Quota Share  Retrocession
   Agreement at terms  as outlined in the slip  agreement dated May 24,  2001
   ("the slip terms").

 6. Dorinco shall  have the option,  at July 1,  2002, and again  at July  1,
   2003,  to  maintain or  increase  its  participation in  the  Quota  Share
   Retrocession Agreement  at or  to any amount  up to  and including  Twenty
   Million Dollars ($20,000,000) at the "slip terms".

 7. In  the event Incurred Losses (including LAE  and IBNR) under the July 1,
   2000 treaty    year in respect of  the Quota Share Retrocession  Agreement
   shall at any time exceed  77%,  the options  described in  paragraphs five
   and six above shall be extended until the termination or expiration of the
   Quota Share Retrocession Agreement (including renewals thereof).

 8. In the event Dorinco does not earn its full margin under the Quota  Share
   Retrocession Agreement  during each of the  three treaty years  commencing
   July 1,  2001, July 1,  2002 and July  1, 2003, the  options described  in
   paragraphs five and six above  shall be extended until the termination  or
   expiration of the  Quota Share Retrocession Agreement (including  renewals
   thereof) to  the extent  necessary to permit  Dorinco to  recoup the  lost
   delta  from the  realized margin  to the  full margin,  all at  "the  slip
   terms".

 9. In the  event of any  conflict between the  terms of  this Agreement  and
   those contained in any other agreement between the parties, including  but
   not limited  to the Guaranty of  Performance and Hold Harmless  Agreement,
   dated July 1, 1996, the terms  of this Agreement shall control over  those
   in such other agreement.  However, subject to the foregoing sentence,  all
   such agreements remain in full force and effect according to their terms.

 If you  have any  questions please  contact Matt  Petka or  me.   Otherwise,
 please acknowledge  your agreement  by signing  and dating  the  appropriate
 lines below.

 Sincerely,


 Andy Justice
 Senior Vice President


 Agreed:
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         Hallmark Financial Services, Inc.                   Date



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         Dorinco Reinsurance Company                         Date