Exhibit 10(cd)

                      HALLMARK FINANCIAL SERVICES, INC.
                            MANAGEMENT BONUS PLAN
                               FOR FISCAL 2004


 1.   PURPOSE:

   The Hallmark  Financial Services, Inc.  Management Bonus  Plan for  Fiscal
   2004  (the "Bonus  Plan") is  intended to  provide performance-based  cash
   incentive for the management of Hallmark Financial Services, Inc. and  its
   subsidiaries (collectively,  the "Company") based  upon the attainment  of
   targeted profitability for the Company during fiscal 2004.

 2.   PARTICIPANTS:

   Participation in  the Bonus Plan  is limited to  employees of the  Company
   approved  by the  Compensation  Committee of  the  Board of  Directors  in
   consultation with the  Chief Executive Officer and Divisional  Presidents.
   Participants may be  added to or removed from the  Bonus Plan at any  time
   in  the discretion  of the  Compensation Committee.  Participants have  no
   vested  or  contractual rights  under  this  Bonus Plan  until  the  final
   determination and payment of any bonuses under this Bonus Plan.

 3.   BONUSES BASED ON PRE-TAX INCOME:

   This  Bonus  Plan  contemplates the  payment  of  specified  annual  bonus
   amounts to  participants whose performance  has been  satisfactory to  the
   Chief Executive Officer and Compensation Committee. The bonus amounts  for
   each participant  are based  upon the  attainment of  specified levels  of
   Pre-Bonus Pre-Tax  Income (as defined  below). The Compensation  Committee
   has  established the  following Threshold,  Target and  Maximum levels  of
   Pre-Bonus  Pre-Tax Income  for the  determination  of bonuses  under  this
   Bonus Plan:

                    Threshold          Target           Maximum
                    ---------          ------           -------
                   $5,453,000        $6,364.000        $9,548,000
               (Approximately 85%                   (150% of Target)
                    of Target

   For each participant, the specified  annual bonus amount at each level  of
   Pre-Bonus  Pre-Tax Income  is set  forth in  an attachment  to this  Bonus
   Plan. To the extent  Pre-Bonus Pre-Tax Income exceeds the Threshold  level
   but  is less  than  the Target  level,  each qualifying  participant  will
   receive a proportionate increase in the Threshold level bonus.  Similarly,
   to the  extent Pre-Bonus Pre-Tax  Income exceeds the  Target level but  is
   less than  the Maximum level, each  qualifying participant will receive  a
   proportionate increase in the Target level bonus.

   For purposes  of this  Bonus Plan,  "Pre-Bonus Pre-Tax  Income" means  the
   consolidated  pretax  income of  the  Company  from  recurring  operations
   (i.e.,  excluding  the   effect  of  any  extraordinary  transactions   as
   determined by  the Compensation Committee) before  the payment or  accrual
   of income  taxes or  any amounts determined  under this  Bonus Plan.  Pre-
   Bonus  Pre-Tax Income  will be  determined by  the Compensation  Committee
   from the financial statements  of the Company prepared in accordance  with
   past  practice and  the  advice  of the  Company's  independent  certified
   public accountants.

 4.   DETERMINIATION AND PAYMENT OF BONUSES

   The bonus amounts and qualification of participants to receive such  bonus
   amounts  will also  be based  on satisfactory  job performance,  including
   characteristics  of  cooperation,   positive  attitude  and  teamwork   in
   achieving corporate goals, as determined by the Compensation Committee  in
   consultation with the Chief Executive Officer. All bonuses awarded by  the
   Compensation Committee under this Bonus  Plan will be paid within 90  days
   following  the  end  of the  fiscal  year.  Provided,  however,  that  the
   Compensation  Committee may  determine to  defer up  to 30%  of the  total
   bonus awarded to  any person designated as  an "executive officer" by  the
   Board  of Directors.  Any amount  so  deferred will  be payable  in  equal
   installments on  the first two  anniversaries of payment  of the  original
   bonus.  In  all events,  each  participant  must remain  employed  by  the
   Company on the payment date to  be entitled to any bonus under this  Bonus
   Plan.

 5.   INTERPRETATION OF BONUS PLAN

   Any  disagreement  or  dispute  with  respect  to  the  interpretation  or
   application  of this  Bonus Plan  shall be  resolved by  the  Compensation
   Committee.  The good  faith decision  of the  Compensation Committee  with
   respect to any such matter shall be final and conclusive.

 6.   AMENDMENT OR TERMINATION OF BONUS PLAN

   This  Bonus  Plan  may  be  amended  or  terminated  by  the  Compensation
   Committee at any time prior to the payment of any bonuses hereunder.