Exhibit 10 (bh)

                              AMENDMENT NO. 3

         Loan Agreement Between Hallmark Financial Services, Inc.
                      And Dorinco Reinsurance Company


       This Amendment No.  3 is  made and  entered into  effective as  of
  November 19, 1999, by and between Hallmark Financial Services,  Inc., a
  Nevada corporation (the "Borrower"), and Dorinco Reinsurance Company, a
  Michigan corporation (the "Lender").

       WHEREAS, Borrower and  Lender have entered  into a Loan  Agreement
  dated March 10, 1997, which Loan Agreement has previously been  amended
  by an Amendment  No. 1 executed  by Borrower on  July 31,  1998 and  by
  Lender on August 14, 1998, and an Amendment No. 2 effective as of March
  5, 1999 (as amended, the "Agreement");

       WHEREAS, Borrower has prepaid $3,966,670 of the original principal
  amount of the  Promissory Note and  has executed  a renewal  Promissory
  Note of  even date  herewith reflecting  the new  principal balance  of
  $3,033,330 and certain revised payment terms;

       WHEREAS,  Borrower  and  Lender   desire  to  set  forth   certain
  additional agreements  and  further  amend the  Agreement  as  provided
  herein;

       THEREFORE, in  consideration  of the  mutual  covenants  contained
  herein the parties hereby agree as set forth below.

       A.   Lender acknowledges receipt from Borrower of reduced  monthly
  principal payments on the  Promissory Note of  $20,000 on September  30
  and October 31, 1999, as well  as a principal prepayment of  $3,966,670
  on November  19, 1999.   Lender  hereby waives  any default  under  the
  Agreement resulting from  such reduced monthly  principal payments  and
  waives all prepayment penalties set forth in the Promissory Note.

       B.   Subsections 1.s. and 1.t. of the Agreement are hereby deleted
  in their entirety.

       C.   Subsection 1.x. of  the Agreement  is hereby  deleted in  its
  entirety and the following Subsection 1.x. is substituted in its place:

                 "x.  'Flatiron Documents' means  that certain  Sale
       and Assignment Agreement and that certain Premium  Receivable
       Servicing  Agreement,  each  dated  to  be  effective  as  of
       November 18, 1999, between HFC and FPF, Inc."

       D.   Subsection 1.z. of  the Agreement  is hereby  deleted in  its
  entirety and the following Subsection 1.z. is substituted in its place:

                 "z.  'Outstanding  Debt'   means  any   obligation,
       indebtedness or  liability  now  or  hereafter  owed  by  HFC
       pursuant to the Flatiron Documents."
<PAGE>
       E.   Subsection 1.ac. of  the Agreement is  hereby deleted in  its
  entirety and  the  following Subsection  1.ac.  is substituted  in  its
  place:

                 "ac. 'Promissory Note'  means the  Promissory  Note
       dated November 19, 1999, in the original principal amount  of
       $3,033,330.00 from Borrower, as  maker, payable to the  order
       of Lender, and  all extensions,  renewals, substitutions  and
       modifications thereof."

       F.   Section 2 of the Agreement is hereby deleted in its  entirety
  and the following Section 2 is substituted in its place:

            "2.  Promissory Note  Commitment.  Lender will  loan  to
       Borrower  the  sum  of  $3,033,330.00  upon  the  terms   and
       conditions set  forth in  this Agreement  and the  Promissory
       Note for the purposes  set forth in  Subsection 6.k. of  this
       Agreement."

       G.   The introductory paragraph of Section  3 of the Agreement  is
  hereby deleted in its entirety and the following introductory paragraph
  of Section 3 is substituted in its place:

            "3.  Collateral.  In order  to secure the  Indebtedness,
       Borrower has caused ACO to pledge to Lender the Pledged Stock
       pursuant to the terms of the Pledge Agreement attached hereto
       as Exhibit B.  Lender shall  not presently have or claim  any
       security  interest  in  the  Restricted  Stock.    Upon   the
       occurrence  of  any   "triggering  event"  specified   below,
       Borrower shall, and shall cause ACO to, within ten (10) days,
       execute and deliver  to Lender  a Stock  Pledge and  Security
       Agreement  in  substantially  the  same  form  as  Exhibit  B
       (without any material change thereto) covering the Restricted
       Stock, together with certificates representing the Restricted
       Stock, and thereafter such  Restricted Stock shall be  deemed
       Pledged Stock  for  purposes  of  this  Agreement;  provided,
       however, that the  pledge of the  Restricted Stock to  Lender
       shall in all  events be  subject to  any required  regulatory
       approval by the Commissioner or  otherwise.  For purposes  of
       this Section 3, a "triggering event" means:"

       H.   Subsections 3.c. and 3.d. of the Agreement are hereby deleted
  in their entirety.
<PAGE>
       I.   Subsection 4.e. of  the Agreement  is hereby  deleted in  its
  entirety and the following Subsection 4.e. is substituted in its place:


            "4.  Conditions to this Agreement.

                 "e.  Reinsurance Treaty. Borrower shall have caused
       AH to  offer, for  the time  period set  forth in  the  table
       contained in this  paragraph, to  reinsure a  portion of  its
       Personal Lines Auto Quota Share Reinsurance with Lender,  the
       form  and   content  of   such  reinsurance   treaty  to   be
       substantially similar to  Exhibit D  attached to  and made  a
       part of this  Agreement, in amounts  sufficient to allow  for
       the following schedule of ceded premiums:

                     Treaty Years                  Ceded Premium

                 07/01/99 to 06/30/00              $   9,000,000
                 07/01/00 to 06/30/01              $   9,000,000
                 07/01/01 to 06/30/02              $   9,000,000
                 07/01/02 to 06/30/03              $   9,000,000
                 07/01/03 to 06/30/04              $   9,000,000

       Premiums ceded  to Lender  pursuant to  a reinsurance  treaty
       with a  managing  general  agency for  whom  Borrower  or  an
       Affiliate serves  as  the program  administrator  or  similar
       function will  not  be  counted toward  satisfaction  of  the
       foregoing schedule of ceded premiums."

       J.   The words "NationsBank Loan  Documents" in Subsections  5.i.,
  5.m. and 5.o.(ii)  of the Agreement  are hereby deleted  and the  words
  "Flatiron Documents" substituted in their place.

       K.   Subsection 6.k. of  the Agreement  is hereby  deleted in  its
  entirety and the following Subsection 6.k. is substituted in its place:

            "6.  Affirmative Covenants.

                 "k.  Use  of  Proceeds.  Borrower  may  use  up  to
       $1,000,000 of the  proceeds of  the Promissory  Note for  the
       general corporate  purposes  of Borrower  including,  without
       limitation,  the   acquisition  of   computer  hardware   and
       software.  Borrower shall use the balance of the proceeds  of
       the Promissory  Note to  purchase  additional shares  of  the
       capital stock or otherwise  contribute to the equity  capital
       of HFC."

       L.   Subsection 6.m.(i) of the Agreement is hereby deleted in  its
  entirety and the  following Subsection  6.m.(i) is  substituted in  its
  place:

            "6.  Affirmative Covenants.

                 "m.  Statutory Capital and Surplus.

                      "(i) Borrower  shall  cause  AH  to   maintain
       Statutory Capital and  Surplus of at  least $4,000,000 as  of
       the date of each reporting period required by law or required
       by the Texas Department of Insurance."
<PAGE>

       M.   Subsection 6.m.(ii) of the  Agreement is hereby  deleted
  in its entirety.

       N.   Subsection 6.o. of  the Agreement  is hereby  deleted in  its
  entirety and  the  following Subsections  6.o.  is substituted  in  its
  place:

            "6.  Affirmative Covenants.

                 "o.  Reinsurance Treaty. Borrower shall cause AH to
       continue to offer, for the time period set forth in the table
       contained in this  paragraph, to  reinsure a  portion of  its
       Personal  Lines  Auto  Quota  Share Reinsurance with  Lender,
       the  form  and   content  of such  reinsurance  treaty  to be
       substantially  similar  to  Exhibit  D  attached  hereto,  in
       amounts  sufficient  to allow  for the  following schedule of
       ceded premiums:

                     Treaty Years              Ceded
                                              Premium

                 07/01/99 to 06/30/00      $ 9,000,000
                 07/01/00 to 06/30/01      $ 9,000,000
                 07/01/01 to 06/30/02      $ 9,000,000
                 07/01/02 to 06/30/03      $ 9,000,000
                 07/01/03 to 06/30/04      $ 9,000,000

       Premiums ceded  to Lender  pursuant to  a reinsurance  treaty
       with a  managing  general  agency for  whom  Borrower  or  an
       Affiliate serves  as  the program  administrator  or  similar
       function will  not  be  counted toward  satisfaction  of  the
       foregoing schedule of ceded premiums."

       O.   Subsection 7.a.(v) of the Agreement is hereby deleted in  its
  entirety.

       P.   The words "NationsBank Loan Documents" in Subsections 7.e and
  7.g. of  the  Agreement are  hereby  deleted and  the  words  "Flatiron
  Documents" substituted in their place.

       Q.   Except as expressly amended hereby, all terms and  conditions
  of the Agreement shall remain in full force and effect.
<PAGE>
       IN  WITNESS  WHEREOF,  the  parties  hereto  have  executed   this
  Amendment No. 3 to be effective as of the date set forth above.

  BORROWER:

  HALLMARK FINANCIAL SERVICES, INC.



  By:_________________________________
  Name:     Linda H. Sleeper
  Title:    Executive Vice President


  LENDER:

  DORINCO REINSURANCE COMPANY


  By:_________________________________

  Name:     _____________________________

  Title:    _____________________________