EXHIBIT 10 (f)

 August 3, 2001




 Dorinco Reinsurance Company
 1320 Waldo Avenue, Suite 200
 Midland, Michigan  48642

 Attention:  David E. Chamberlain

 RE:  Loan Agreement dated  March 10, 1997,  and amended by  Amendment No.  1
      executed August 14, 1998, Amendment No.  2 effective March 5, 1999  and
      Amendment No.  3 effective  November 19,  1999 (as  amended, the  "Loan
      Agreement") between Hallmark Financial Services, Inc. ("Borrower")  and
      Dorinco Reinsurance Company ("Lender")

 Dear Mr. Chamberlain:

 The purpose of this letter is  to obtain written acknowledgment of  Lender's
 waiver of the "triggering events" under Subsections 3.a and 3.b. of the Loan
 Agreement for the quarter ended June 30, 2001.

 As you  know,  effective  July 1,  2000,  Borrower's  insurance  subsidiary,
 American Hallmark  Insurance Company  of Texas  ("AH"), entered  into a  new
 reinsurance agreement  with  Lender  which  altered  several  terms  of  the
 previous reinsurance arrangement  between the parties.  Among other  things,
 the new reinsurance  agreement provides that  policy fees are  ceded on  the
 same basis as  premiums rather  than retained by  AH as  provided under  the
 prior arrangement. This change in treatment  of policy fees has  predictably
 had an adverse impact on AH's statutory accounting Loss Ratio (as defined in
 the Loan  Agreement).   Effective  April 1,  2001,  AH and  Dorinco  further
 amended the reinsurance  agreement to include  a loss  corridor on  policies
 written effective April 1, 2001.  Thus, for losses that fall within the loss
 corridor AH  assumes 100%  of the  risk.   Additionally, during  the  second
 quarter ended  June  30,  2001, AH  incurred  extraordinary  weather-related
 losses principally  in  connection with  a  catastrophic flood  in  Houston,
 Texas.   Finally, although  AH has  implemented  premium rate  increases  of
 approximately 30%  during  the last  eighteen  month period,  a  significant
 portion of earned premiums as reflected  in financial statements ended  June
 30, 2001, are still at depressed rates.

 The Combined Ratio and the Loss Ratio of  AH for the six month period  ended
 June 30, 2001, exceeded the respective thresholds of 83% and 107% set  forth
 in Subsections 3.a and 3.b. of the Loan Agreement. AH's Loss Ratio was  101%
 and the Combined Ratio was  115%.  However, in the  absence of the change in
 treatment of policy fees, the addition of  the  loss corridor  and  weather-
 related  claims (particularly the Houston flood which significantly impacted
 the  loss  corridor),  the  Combined Ratio  and Loss Ratio for the six month
 period ended June 30,  2001, would have been  89.1% and 77.9%, respectively.
 Further,  the change in  treatment of policy  fees favorably  impacted  AH's
 premium to surplus  ratio, as intended.  The premium to surplus ratio was at
 an acceptable 2.85:1 on  reported surplus of  $6.3 million at June 30, 2001.
 Therefore,  Borrower  requests  a  waiver  of  the "triggering events" under
 Subsections  3.a. and 3.b.  of the Loan  Agreement for  the six month period
 ended June 30, 2001.

 Please acknowledge Lender's consent to the requested waiver by executing and
 returning to the undersigned the enclosed duplicate original of this letter.
 Thank you for your courtesy and cooperation in this matter.


 Very truly yours,


 Linda H. Sleeper
 President and CEO


 CONSENTED TO AND AGREED AS OF __________________, 2001:

 DORINCO REINSURANCE COMPANY



 By:  ______________________________

      Name:_________________________

      Title:________________________