SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 (Mark One)
 þ
    ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934  For the fiscal year ended
    December 31, 2009 or
  o
    TRANSITION REPORT PURSUANT TO
    SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934      WESCO FINANCIAL
    CORPORATION
 (Exact name of Registrant as
    Specified in its Charter)
  Delaware(State or Other Jurisdiction of
    Incorporation or organization)

95-2109453(I.R.S. Employer Identification No.)301 East Colorado Boulevard, Suite 300,
    Pasadena, California(Address of Principal Executive
    Offices)

91101-1901
    (Zip Code)  (626) 585-6700
 (Registrants Telephone
    Number, Including Area Code)
  Securities registered pursuant to
    section 12(b) of the Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCapital Stock, $1 par value

NYSE Amex       (Title of Class)
   (Title of Class)
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated filer
    o

Accelerated filer
    þ

Non-accelerated filer
    o

Smaller reporting company
    o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
        Parts ofTitle of Document

Form 10-KProxy Statement for 2010
    Annual Meeting of Shareholders

Part III. Items 10, 11, 12, 13 and 14  9




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##### 





PART I
  Item 1.
    Business  GENERAL
    
    the insurance business, through Wesco-Financial Insurance
    Company (Wes-FIC), which was incorporated in 1985
    and engages in the property and casualty insurance business, and
    The Kansas Bankers Surety Company (KBS), which was
    incorporated in 1909, purchased by Wes-FIC in 1996 and provides
    specialized insurance coverages for banks;
    the furniture rental business, through CORT Business Services
    Corporation (CORT), which traces its national
    presence to the combination of five regional furniture rental
    companies in 1972 and was purchased by Wesco in 2000; and
    the steel service center business, through Precision Steel
    Warehouse, Inc. (Precision Steel), which was begun
    in 1940 and acquired by Wesco in 1979.        INSURANCE SEGMENT
    excess-of-loss
 10




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##### 




    Participation, since 2001, in several risk pools managed by a
    subsidiary of General Reinsurance Corporation, covering
    principally hull, liability and workers compensation
    exposures, relating to the aviation industry. For the past three
    years, Wes-FIC has participated to the extent of 16.67% in
    several hull and liability pools and 5% of a workers
    compensation pool. In July 2009, it began to participate to the
    extent of 25% in an international pool. Another General
    Reinsurance Corporation subsidiary provides a portion of the
    upper-level reinsurance protection to these aviation risk pools,
    and therefore to Wes-FIC, on terms that could cause some
    conflict of interest under certain conditions, such as in
    settling a large loss. Wes-FICs exposure to detrimental
    effects, however, is mitigated because a senior manager of NICO
    who represents the membership interests of Wes-FIC and unrelated
    pool members with an additional 75% of the hull and liability
    pools and 90% of the workers compensation pool who have
    the same exposures to this potential conflict of interest, has
    access to information regarding significant losses and thus is
    able to address conflict issues that might arise.
    Participation, since the beginning of 2008, in a retrocession
    agreement with NICO, to assume 10% of NICOs quota share
    reinsurance of Swiss Reinsurance Company and its major
    property-casualty affiliates (Swiss Re). Under this
    agreement, Wes-FIC has assumed 2% part of NICOs 20% quota
    share reinsurance of all Swiss Re property-casualty risks
    incepting over the five-year period ending December 31,
    2012 on the same terms as NICOs agreement with Swiss Re.
    Wes-FICs share of written premiums under the contract was
    $294.1 million in 2009, giving rise to earned premiums of
    $276.7 million, the latter representing 85.6% of
    Wes-FICs 2009 earned premiums and 34.0% of Wescos
    consolidated revenues. Annual premiums in each of the three
    remaining years under the contract could vary significantly
    depending on market conditions and opportunities. See
    Item 7, Managements Discussion and Analysis of
    Financial Condition and Results of Operations, beginning on
    page 20, for more information about the impact of
    Wes-FICs participation in the Swiss Re contract.       11




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12




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FURNITURE RENTAL
    SEGMENT
  rent-to-rent rent-to-own)
  rent-to-rent rent-to-own Rent-to-rent rent-to-rent month-to-month rent-to-own month-to-month
    
    expanding its commercial customer base;
    enhancing its ability to capture an increasing number of
    Internet customers through its on-line catalog and other web
    services;
    making selective acquisitions; and
    continuing to develop various products and services.       13




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##### 



rent-to-rent rent-to-rent rent-to-own
        INDUSTRIAL SEGMENT
         14




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##### 



off-the-shelf
      ACTIVITIES NOT
    IDENTIFIED WITH A BUSINESS SEGMENT
      AVAILABLE INFORMATION
  Forms 10-K, 10-Q 8-K,
  Item 1A.
    Risk
    Factors    An investment
    in Wesco is not an investment in Berkshire
    Hathaway.
    Wescos
    investments are unusually concentrated and fair values are
    subject to loss in value.
   15




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##### 



Wesco is
    dependent for its investment and all other capital allocation
    decisions on a few key people.
    Wescos
    Wes-FIC subsidiary is dependent upon the Berkshire Insurance
    Group for its management and personnel, and for opportunities to
    participate with the Berkshire Insurance Group in reinsurance
    contracts representing essentially the entirety of its
    reinsurance business, as well as a significant portion of its
    insurance business to date.
  and/or
  Wescos
    tolerance for risk in its insurance businesses may result in a
    high degree of volatility in periodic reported
    earnings.
       16




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##### 



The degree of
    estimation error inherent in the process of estimating property
    and casualty insurance loss reserves may result in a high degree
    of volatility in periodic reported earnings.
    Each of
    Wescos operating businesses faces intense competitive
    pressures.
    Unfavorable
    economic conditions could hurt Wescos operating
    businesses.
    In addition to
    the foregoing risk factors inherent in Wescos operations,
    Wescos shareholders face a market liquidity risk because
    the daily trading volume of Wescos shares on NYSE Amex is
    relatively low.
    Item 1B.
    Unresolved Staff
    Comments    Item 2.
    Properties     17




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##### 



Item 3.
    Legal
    Proceedings    Item 4.
    Submission of
    Matters to a Vote of Security Holders    PART II
  Item 5.
    Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Repurchases of Equity Securities      2009

2008Sales Price

Dividends

Sales Price

DividendsQuarter Ended

High

Low

Paid

High

Low

PaidMarch 31

$309

$222

$0.395

$421

$368

$0.385June 30

320

275

0.395

450

368

0.385September 30

326

285

0.395

401

352

0.385December 31

349

315

0.395

372

243

0.385$1.58





$1.54      18




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##### 



Item 6.
    Selected
    Financial Data    December 31,2009


2008


2007


2006


2005Assets:Cash and cash equivalents

$
273,671


$
297,643


$
526,722


$
1,257,351


$
1,194,113Investments Securities with fixed maturities


229,872



28,656



38,600



81,861



74,441Marketable equity securities


2,065,627



1,868,293



1,919,425



1,040,550



884,673Accounts receivable


37,983



57,489



42,841



37,204



39,203Receivable from affiliates


173,476



133,396



36,671



23,182



14,784Rental furniture


177,793



217,597



178,297



182,846



187,572Goodwill of acquired businesses


277,590



277,742



266,607



266,607



266,607Other assets


165,414



169,879



103,846



80,704



67,118Total assets

$
3,401,426


$
3,050,695


$
3,113,009


$
2,970,305


$
2,728,511Liabilities:Insurance losses and loss adjustment expenses Affiliated business

$
290,375


$
164,424


$
39,687


$
29,761


$
19,697Unaffiliated business


53,091



50,844



54,158



48,549



42,283Unearned insurance premiums Affiliated business


110,477



94,544



15,041



14,062



12,301Unaffiliated business


11,516



13,251



15,225



15,298



16,092Deferred furniture rental income and security deposits


11,846



17,674



19,947



20,440



22,204Accounts payable and accrued expenses


54,537



61,145



49,476



48,258



52,587Notes payable


28,200



40,400



37,200



38,200



42,300Income taxes payable, principally deferred


290,667



230,657



347,416



355,399



290,615Total liabilities

$
850,709


$
672,939


$
578,150


$
569,967


$
498,079Shareholders equity:Capital stock and additional paid- in capital

$
33,324


$
33,324


$
33,324


$
33,324


$
33,324Accumulated other comprehensive income Unrealized appreciation of investments, net of taxes


284,051



154,660



381,017



344,978



256,710Foreign currency translation adjustments, net of taxes


(1,151
)


(1,897
)










Retained earnings


2,234,493



2,191,669



2,120,518



2,022,036



1,940,398Total shareholders equity

$
2,550,717


$
2,377,756


$
2,534,859


$
2,400,338


$
2,230,432Per capital share

$
358.26


$
333.96


$
356.03


$
337.14


$
313.27   19




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##### 



Year Ended December 31,2009


2008


2007


2006


2005Revenues:Furniture rentals

$
312,234


$
340,162


$
327,671


$
324,300


$
303,485Sales and service revenues


106,342



130,753



129,861



139,058



141,749Insurance premiums earned Affiliated business


307,560



218,094



35,530



32,643



32,450Unaffiliated business


15,661



19,870



18,881



21,506



17,032Dividend and interest income


67,458



79,079



90,872



84,504



56,792Realized net investment gains






7,006



24,240







333,241Other


4,076



3,990



3,869



3,716



3,541813,331



798,954



630,924



605,727



888,290Costs and expenses:Cost of products and services sold


130,992



149,319



143,282



154,218



153,402Insurance losses and loss adjustment expenses Affiliated business


198,853



151,308



24,008



21,401



11,990Unaffiliated business


14,454



20,892



4,269



9,944



9,482Insurance underwriting expenses Affiliated business


92,857



63,156



8,019



7,566



6,611Unaffiliated business


5,946



7,135



7,284



7,294



6,832Selling, general and administrative


305,934



300,231



280,728



265,327



262,594Interest expense


641



1,798



2,408



2,711



1,575749,677



693,839



469,998



468,461



452,486Income before income taxes


63,654



105,115



160,926



137,266



435,804Income taxes


9,581



22,999



51,765



45,233



141,225Net income

$
54,073


$
82,116


$
109,161


$
92,033


$
294,579Amounts per share:Net income

$
7.59


$
11.53


$
15.33


$
12.93


$
41.37Cash dividends


1.58



1.54



1.50



1.46



1.42       Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    OVERVIEW
   20




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day-to-day
    FINANCIAL CONDITION
             21




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##### 



RESULTS OF OPERATIONS
            all after income tax effect
  Year Ended December 31,2009


2008


2007Insurance segment:Underwriting

$
7,222


$
(2,942
)

$
7,040Investment income


55,781



64,274



65,207Furniture rental segment


(1,359
)


15,744



20,316Industrial segment


(648
)


842



915Nonsegment items other than investment gains


(6,923
)


(356
)


(73
)Realized investment gains






4,554



15,756Consolidated net income

$
54,073


$
82,116


$
109,161  22




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##### 



Insurance
    Segment
    Year Ended December 31,2009


2008


2007Insurance premiums written Reinsurance

$
329,227


$
298,622


$
35,346Primary


9,964



17,850



19,493Total

$
339,191


$
316,472


$
54,839Insurance premiums earned Reinsurance

$
311,144


$
217,584


$
34,998Primary


12,077



20,380



19,413Total


323,221



237,964



54,411Insurance losses, loss adjustment expenses and underwriting
    expenses


312,110



242,491



43,580Underwriting gain (loss), before income taxes Reinsurance


15,968



(2,162
)


2,158Primary


(4,857
)


(2,365
)


8,673Total


11,111



(4,527
)


10,831Income taxes


3,889



(1,585
)


3,791Underwriting gain (loss)

$
7,222


$
(2,942
)

$
7,040      23




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24




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##### 



25




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##### 



Year Ended December 31,2009


2008


2007Investment income, before taxes

$
67,049


$
84,920


$
89,716Income taxes


11,268



20,646



24,509Investment income, after taxes

$
55,781


$
64,274


$
65,207           Furniture Rental
    Segment
    Year Ended December 31,2009


2008


2007Revenues:Furniture rentals

$
312,234


$
340,162


$
327,671Furniture sales


61,191



61,800



61,704Service fees


6,771



8,081



6,795380,196



410,043



396,170Cost of rentals, sales and fees


99,042



97,997



91,407Selling, general and administrative expenses


283,590



287,498



268,469Interest expense


640



1,798



2,408383,272



387,293



362,284Income (loss) before income taxes


(3,076
)


22,750



33,886Income taxes


(1,717
)


7,006



13,570Segment net income (loss)

$
(1,359
)

$
15,744


$
20,316  26




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##### 



year-to-year
 27




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##### 



Industrial
    Segment
    Year Ended December 31,2009


2008


2007Revenues, principally sales and services

$
38,380


$
60,872


$
61,361Cost of sales and services


31,950



51,323



51,875Selling, general and administrative expenses


7,435



7,948



7,96839,385



59,271



59,843Income (loss) before income taxes


(1,005
)


1,601



1,518Income taxes


(357
)


759



603Segment net income (loss)

$
(648
)

$
842


$
915     Form 10-K
  last-in,
    Unrelated to
    Business Segment Operations
   28




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OFF-BALANCE SHEET
    ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
     29




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##### 



Payments DueTotal


2010


2011-2012


2013-2014


ThereafterNotes payable, including interest

$
28,295


$
28,095


$



$
200


$
Operating lease obligations


108,090



27,755



41,544



22,113



16,678Payment of insurance losses and loss adjustment expenses*


343,466



102,740



116,620



77,947



46,159Purchase obligations, other than for capital expenditures


10,536



5,668



2,786



1,608



474Purchase obligations for capital expenditures**


1,231



1,231











Other, principally deferred compensation


5,898



196



288



267



5,147Totals

$
497,516


$
165,685


$
161,238


$
102,135


$
68,458     *
    
    Amounts and timing of payments are significantly dependent on
    estimates. See Critical Accounting Policies and Practices below.**
    
    Principally, construction costs of MS Propertys luxury
    condominium development.    CRITICAL ACCOUNTING
    POLICIES AND PRACTICES
    Use of Estimates
    in Preparation of Financial Statements
   30




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##### 



Investments
  held-to-maturity, available-for-sale. available-for-sale
  other-than-temporary other-than-temporary
    Fair
    Value
         31




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##### 



Rental
    Furniture
    Revenue
    Recognition
          Losses and Loss
    Adjustment Expenses
       32




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##### 



December 31,


December 31,2009


2008Case reserves

$
121,389


$
61,757IBNR reserves


222,077



153,511Gross liability before ceded reinsurance


343,466



215,268Ceded reserves


(19,288
)*


(17,914
)*Net reserves

$
324,178


$
197,354     *
    
    Represents principally, Wes-FICs proportionate share of
    reinsurance purchased by the aviation pools.    Gross Unpaid Losses


Net Unpaid Losses*Dec. 31,


Dec. 31,


Dec. 31,


Dec. 31,2009


2008


2009


2008Swiss Re contract

$
246,596


$
127,215


$
246,596


$
127,215Other reinsurance, principally aviation-related


80,170



73,356



61,152



55,442KBS primary


16,700



14,697



16,430



14,697Total

$
343,466


$
215,268


$
324,178


$
197,354     *
    
    Net of reinsurance recoverable, and before foreign currency
    translation effects.   33




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Reinsurance
        Primary insurance
 34




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Goodwill of
    Acquired Businesses
    rent-to-rent
  Realized
    Investment Gains and Losses
  other-than-temporary
 35




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Item 7A.
    Quantitative and
    Qualitative Disclosures About Market Risk    EQUITY PRICE RISK
      Coca-Cola
    December 31, 2009


December 31, 2008Increase


Decrease


Increase


DecreaseMarket value of marketable equity securities As recorded

$
2,065,627


$
2,065,627


$
1,868,293


$
1,868,293Hypothetical


3,098,440



1,032,813



2,802,440



934,147Shareholders equity As recorded


2,550,717



2,550,717



2,377,756



2,377,756Hypothetical


3,222,045



1,879,388



2,984,951



1,770,561  36




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INTEREST RATE RISK
      FOREIGN CURRENCY RISK
  Coca-Cola
  FORWARD-LOOKING
    STATEMENTS
  expects, anticipates, intends, plans,
    believes, estimates, may, could,
   37




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Item 8.
    Financial
    Statements and Supplementary Data     
 Financial Statements

Page Number(s)Report of independent registered public
    accounting firm


41-42Consolidated balance sheet 
    December 31, 2009 and 2008


43Consolidated statement of income 
    years ended December 31, 2009, 2008 and 2007


44Consolidated statement of cash flows 
    years ended December 31, 2009, 2008 and 2007


45Consolidated statement of changes in
    shareholders equity and comprehensive income
     years ended December 31, 2009, 2008 and 2007


46Notes to consolidated financial statements


47-60      Financial Statement Schedule

Schedule Number


Page Number(s)Condensed financial information of Wesco December 31, 2009 and 2008, and years ended
    December 31, 2009, 2008 and 2007


I



61-62   Item 9.
    Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure    Item 9A.
    Controls and
    Procedures      MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  Rule 13A-5(f) Rule 13a-15(c)
 38




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Internal Control 
    Integrated Framework
         Item 9B.
    Other
    Information    PART III
  Item 10.
    Directors,
    Executive Officers and Corporate Governance    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Shareholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   39




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##### 



Item 15.
    Exhibits and
    Financial Statement Schedules  Regulation S-K) Form 10-K
  Form 10-K Form 8-K No. 1-4720)
                 40




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##### 



SIGNATURES
     By:

/s/ Charles T. MungerCharles T. Munger
    Chairman of the Board and President (principal executive officer)

February 26, 2010By:

/s/ Jeffrey L. JacobsonJeffrey L. Jacobson
    Vice President and Chief Financial Officer 
    (principal financial and accounting officer)

February 26, 2010    /s/ Carolyn H. CarlburgCarolyn H. Carlburg 
    Director

February 26, 2010/s/ Robert E. DenhamRobert E. Denham 
    Director

February 26, 2010/s/ Robert T. FlahertyRobert T. Flaherty 
    Director

February 26, 2010/s/ Peter D. KaufmanPeter D. Kaufman 
    Director

February 26, 2010/s/ Charles T. MungerCharles T. Munger 
    Director

February 26, 2010/s/ Elizabeth Caspers
    PetersElizabeth Caspers Peters 
    Director

February 26, 2010  REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM      Internal Control  Integrated
    Framework
 41




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##### 



Internal Control  Integrated Framework
  
    42




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##### 



WESCO FINANCIAL
    CORPORATIONCONSOLIDATED BALANCE SHEET (Dollar amounts
    in thousands)
  December 31,2009


2008ASSETSCash and cash equivalents

$
273,671


$
297,643Investments Securities with fixed maturities


229,872



28,656Marketable equity securities


2,065,627



1,868,293Accounts receivable


37,983



57,489Receivable from affiliates


173,476



133,396Rental furniture


177,793



217,597Goodwill of acquired businesses


277,590



277,742Other assets


165,414



169,879$
3,401,426


$
3,050,695LIABILITIES AND SHAREHOLDERS EQUITYInsurance losses and loss adjustment expenses Affiliated business

$
290,375


$
164,424Unaffiliated business


53,091



50,844Unearned insurance premiums 


110,477



94,544Affiliated businessUnaffiliated business


11,516



13,251Deferred furniture rental income and security deposits


11,846



17,674Accounts payable and accrued expenses


54,537



61,145Notes payable


28,200



40,400Income taxes payable, principally deferred


290,667



230,657850,709



672,939Shareholders equity Capital stock, $1 par value  authorized,
    7,500,000 shares; issued and outstanding,
    7,119,807 shares


7,120



7,120Additional paid-in capital


26,204



26,204Accumulated other comprehensive income


282,900



152,763Retained earnings


2,234,493



2,191,669Total shareholders equity


2,550,717



2,377,756$
3,401,426


$
3,050,695   See notes to consolidated financial statements.
 43




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##### 



WESCO FINANCIAL
    CORPORATIONCONSOLIDATED STATEMENT OF
    INCOME(Dollar amounts
    in thousands except for amounts per share)
  Year Ended December 31,2009


2008


2007Revenues:Furniture rentals

$
312,234


$
340,162


$
327,671Sales and service revenues


106,342



130,753



129,861Insurance premiums earned 


307,560



218,094



35,530Affiliated businessUnaffiliated business


15,661



19,870



18,881Dividend and interest income


67,458



79,079



90,872Realized investment gains






7,006



24,240Other


4,076



3,990



3,869813,331



798,954



630,924Costs and expenses:Cost of products and services sold


130,992



149,319



143,282Insurance losses and loss adjustment expenses 


198,853



151,308



24,008Affiliated businessUnaffiliated business


14,454



20,892



4,269Insurance underwriting expenses Affiliated business


92,857



63,156



8,019Unaffiliated business


5,946



7,135



7,284Selling, general and administrative expenses


305,934



300,231



280,728Interest expense


641



1,798



2,408749,677



693,839



469,998Income before income taxes


63,654



105,115



160,926Income taxes


9,581



22,999



51,765Net income

$
54,073


$
82,116


$
109,161Amounts per capital share based on 7,119,807 shares
    outstanding throughout each year:Net income

$
7.59


$
11.53


$
15.33Cash dividends


1.58



1.54



1.50   See notes to consolidated financial statements.
 44




---



##### 



WESCO FINANCIAL
    CORPORATIONCONSOLIDATED STATEMENT OF CASH
    FLOWS  (Dollar amounts in
    thousands)
  Year Ended December 31,2009


2008


2007Cash flows from operating activities:Net income

$
54,073


$
82,116


$
109,161Adjustments to reconcile net income with net cash flows from
    operating activities Gross profit on sale of rental furniture


(20,755
)


(22,447
)


(22,678
)Investment gains






(7,006
)


(24,240
)Depreciation and amortization


55,500



49,574



41,515Change in liabilities for insurance losses and loss adjustment
    expenses Affiliated business


125,951



124,737



9,926Unaffiliated business


2,247



(3,314
)


5,609Change in unearned insurance premiums Affiliated business


15,933



79,503



979Unaffiliated business


(1,735
)


(1,974
)


(73
)Change in receivable from affiliates


(40,080
)


(96,725
)


(13,489
)Change in income taxes payable


(9,410
)


4,953



(27,075
)Other, net


12,134



(16,767
)


2,724Net cash flows from operating activities


193,858



192,650



82,359Cash flows from investing activities:Purchases of securities with fixed maturities


(208,269
)






(29,106
)Purchases of equity securities






(349,071
)


(826,826
)Purchases of rental furniture


(45,385
)


(74,572
)


(73,809
)Proceeds from redemptions and maturities of securities with
    fixed maturities


8,639



7,402



74,195Proceeds from sales of rental furniture


61,192



61,800



61,704Proceeds from sales of equity securities






60,203



25,126Change in condominium construction in process


(5,420
)


(28,510
)


(26,059
)Acquisitions of businesses, net of cash acquired


(878
)


(81,428
)


Other, net


(4,333
)


(8,863
)


(6,534
)Net cash flows from investing activities


(194,454
)


(413,039
)


(801,309
)Cash flows from financing activities:Borrowings (repayments), net, under revolving credit facility


(12,200
)


3,200



(1,000
)Payment of cash dividends


(11,249
)


(10,965
)


(10,679
)Net cash flows from financing activities


(23,449
)


(7,765
)


(11,679
)Effect of foreign currency exchange rate changes


73



(925
)


Decrease in cash and cash equivalents


(23,972
)


(229,079
)


(730,629
)Cash and cash equivalents  beginning of year


297,643



526,722



1,257,351Cash and cash equivalents  end of year

$
273,671


$
297,643


$
526,722Supplementary disclosuresInterest paid during year

$
713


$
1,744


$
2,309Income taxes paid, net, during year


19,133



17,960



79,011   See notes to consolidated financial statements.
 45




---



##### 



WESCO FINANCIAL
    CORPORATIONCONSOLIDATED STATEMENT OF CHANGES
    IN
    SHAREHOLDERS EQUITY
    AND COMPREHENSIVE INCOME(Dollar amounts in
    thousands)
  Year Ended December 31,2009


2008


2007Capital stock:Balance at beginning and end of year

$
7,120


$
7,120


$
7,120Additional paid-in capital:Balance at beginning and end of year

$
26,204


$
26,204


$
26,204Retained earnings:Balance at beginning of year

$
2,191,669


$
2,120,518


$
2,022,036Net income


54,073



82,116



109,161Cash dividends declared and paid


(11,249
)


(10,965
)


(10,679
)Balance at end of year

$
2,234,493


$
2,191,669


$
2,120,518Accumulated other comprehensive income:Unrealized appreciation (depreciation) of investments, net

$
198,917


$
(348,283
)

$
55,132Applicable income taxes


(69,526
)


121,926



(19,093
)Foreign currency translation adjustments


1,434



(2,687
)


Applicable income taxes


(688
)


790



Other comprehensive income (loss)


130,137



(228,254
)


36,039Accumulated other comprehensive income at beginning of year


152,763



381,017



344,978Accumulated other comprehensive income at end of year

$
282,900


$
152,763


$
381,017Comprehensive income (loss):Net income

$
54,073


$
82,116


$
109,161Other comprehensive income (loss)


130,137



(228,254
)


36,039Total comprehensive income (loss)

$
184,210


$
(146,138
)

$
145,200   See notes to consolidated financial statements.
 46




---



##### 



WESCO FINANCIAL
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  (Dollar amounts in thousands except for amounts per share)
  Note 1.
    Significant
    Accounting Policies and Practices  Nature of
    operations, basis of consolidation, and presentation
          Use of estimates
    in preparation of financial statements
   47




---



##### 



Cash
    equivalents
    Investments
  held-to-maturity, available-for-sale. Held-to-maturity available-for-sale
  other-than-temporary other-than-temporary
  Accounts
    receivable
    Rental
    furniture
    Goodwill of
    acquired businesses
    Dollar amounts in thousands
    except for amounts per share
 48




---



##### 



rent-to-rent
  Inventories
  last-in, first-in,
  Capitalized
    construction costs
    Revenue
    recognition
          Dollar amounts in thousands
    except for amounts per share
 49




---



##### 



Losses and loss
    adjustment expenses
            Income
    taxes
      Dollar amounts in thousands
    except for amounts per share
 50




---



##### 



Foreign
    currency
    Accounting
    pronouncements adopted in 2009 and 2008
              Dollar amounts in thousands
    except for amounts per share
 51




---



##### 



Accounting
    pronouncements not yet in effect
    Note 2.
    Investments    December 31, 2009


December 31, 2008Fair





FairAmortized Cost


Value


Amortized Cost


ValueMortgage-backed securities

$
18,865


$
20,702


$
21,894


$
22,886Corporate bonds


200,000



200,000







Other, principally U.S. government obligations


8,265



9,170



5,606



5,770$
227,130


$
229,872


$
27,500


$
28,656     held-to-maturity,
    FairAmortized Cost


ValueDue in 2010  2013

$
8,265


$
9,170Due in 2014


200,000



200,000Mortgage-backed securities


18,865



20,702$
227,130


$
229,872   Dollar amounts in thousands
    except for amounts per share
 52




---



##### 



December 31, 2009


December 31, 2008Fair (Carrying)





Fair (Carrying)Cost


Value


Cost


ValueThe Procter & Gamble Company

$
372,480


$
378,331


$
372,480


$
385,757The
    Coca-Cola
    Company


40,761



410,719



40,761



326,198Wells Fargo & Company


382,779



341,240



382,779



372,722Kraft Foods Incorporated


325,816



271,800



325,816



268,500US Bancorp


266,940



225,100



266,940



250,100Other


243,661



438,437



243,661



265,016$
1,632,437


$
2,065,627


$
1,632,437


$
1,868,293           Note 3.
    Accounts
    Receivable    December 31,


December 31,2009


2008Trade accounts receivable

$
40,592


$
59,875Allowance for uncollectible accounts


(2,609
)


(2,386
)$
37,983


$
57,489   Note 4.
    Rental
    Furniture    December 31,


December 31,2009


2008Cost of rental furniture

$
294,266


$
323,117Less accumulated depreciation


(116,473
)


(105,520
)$
177,793


$
217,597   Dollar amounts in thousands
    except for amounts per share
 53




---



##### 



Note 5.
    Goodwill    December 31,


December 31,2009


2008Balance at beginning of year

$
277,742


$
266,607Foreign currency translation


(152
)


(495
)Acquisitions of businesses and other






11,630$
277,590


$
277,742         Dollar amounts in thousands
    except for amounts per share
 54




---



##### 



Note 6.
    Insurance Losses
    and Loss Adjustment Expenses Payable      2009


2008


2007Gross liabilities at beginning of year

$
215,268


$
93,845


$
78,310Less ceded liabilities*


(17,914
)


(23,502
)


(11,628
)Net balance at beginning of year


197,354



70,343



66,682Incurred losses recorded during year For current year


225,451



175,962



35,392For all prior years


(12,144
)


(3,762
)


(7,115
)Total incurred losses


213,307



172,200



28,277Payments made during year For current year


34,618



19,433



9,255For all prior years


51,865



25,756



15,362Total payments


86,483



45,189



24,617Net liabilities at end of year


324,178



197,354



70,343Plus ceded liabilities*


19,288



17,914



23,502Gross liabilities at end of year

$
343,466


$
215,268


$
93,845     *
    
    Principally represents Wes-FICs proportionate share of
    reinsurance purchased by the aviation pools.  2002-2007,
  Dollar amounts in thousands
    except for amounts per share
 55




---



##### 



Note 7.
    Notes Payable and
    Other Contractual Obligations    December 31,2009


2008Revolving credit facility

$
28,000


$
40,200Other


200



200$
28,200


$
40,400         Note 8.
    Fair Value
    Measurements    Total Fair


Fair Value Measurements UsingValue


(Level 1)


(Level 2)


(Level 3)December 31, 2009Investments in fixed maturity securities

$
29,872


$



$
29,872


$
Investments in equity securities


2,065,627



1,726,878







338,749December 31, 2008Investments in fixed maturity securities

$
28,656


$



$
28,656


$
Investments in equity securities


1,868,293



1,658,783







209,510     Investments inEquity SecuritiesBalance at December 31, 2008

$
209,510Unrealized gains included in other comprehensive income


129,239Purchases


Balance at December 31, 2009

$
338,749   Dollar amounts in thousands
    except for amounts per share
 56




---



##### 



Note 9.
    Income
    Taxes    December 31,2009


2008Deferred tax liabilities, relating to Appreciation of investments

$
153,511


$
83,985Cost basis differences in investments


116,368



116,368Other items


63,794



60,277333,673



260,630Deferred tax assets


(43,066
)


(31,061
)Net deferred tax liabilities


290,607



229,569Taxes currently payable


60



1,088Income taxes payable

$
290,667


$
230,657     2009


2008


2007Federal

$
12,786


$
24,958


$
50,165State


(2,517
)


(957
)


1,600Foreign


(688
)


(1,002
)


Provision for income taxes

$
9,581


$
22,999


$
51,765Current

$
17,349


$
15,987


$
50,272Deferred


(7,768
)


7,012



1,493Provision for income taxes

$
9,581


$
22,999


$
51,765     2009


2008


2007Statutory Federal income tax rate


35.0
%


35.0
%


35.0
%Increase (decrease) resulting from Dividends received deduction


(25.1
)


(14.6
)


(4.2
)State income taxes, less Federal tax benefit


(2.7
)


(0.3
)


(0.1
)Other differences, net


7.9



1.8



1.5Effective income tax provision rate


15.1
%


21.9
%


32.2
%     Dollar amounts in thousands
    except for amounts per share
 57




---



##### 



Note 10.
    Environmental
    Matters and Litigation        Note 11.
    Quarterly
    Financial Information    Quarter EndedMarch 31,


June 30,


September 30,


December 31,


Total For Year2009Revenues

$
210,802


$
202,515


$
203,884


$
196,130


$
813,331Net income

$
19,959


$
12,930


$
9,882


$
11,302


$
54,073Per capital share


2.80



1.82



1.39



1.58



7.592008Revenues

$
160,196


$
211,342


$
207,001


$
220,415


$
798,954Net income

$
20,717


$
21,573


$
16,164


$
23,662


$
82,116Per capital share


2.91



3.03



2.27



3.32



11.53Realized investment gains 2009Before taxes (included in revenues)

$



$



$



$



$
After taxes (included in net income)


















2008Before taxes (included in revenues)

$



$



$



$
7,006


$
7,006After taxes (included in net income)














4,554



4,554   Note 12.
    Business Segment
    Data      Dollar amounts in thousands
    except for amounts per share
 58




---



##### 



excess-of-loss
        rent-to-rent
      Dollar amounts in thousands
    except for amounts per share
 59




---



##### 



2009


2008


2007Insurance segment:Premiums earned

$
323,221


$
237,964


$
54,411Dividend and interest income


67,253



77,914



89,716Income taxes


15,156



12,055



28,300Net income


63,003



61,332



72,247Depreciation and amortization other than of discounts and
    premiums of investments


26



36



45Advertising expense


111



138



181Capital expenditures


7



4



32Assets at yearend


2,755,509



2,336,463



2,497,794Furniture rental segment:Revenues

$
380,196


$
410,043


$
396,170Income taxes


(1,717
)


7,006



13,570Net income (loss)


(1,359
)


15,744



20,316Depreciation and amortization other than of discounts and
    premiums of investments


53,783



43,195



39,891Advertising expense


12,837



16,762



18,002Interest expense


640



1,798



2,408Capital expenditures


2,972



7,197



3,971Assets at yearend


252,180



310,412



245,817Industrial segment:Sales, service and other revenues

$
38,380


$
60,872


$
61,361Income taxes


(357
)


759



603Net income (loss)


(648
)


842



915Depreciation and amortization


402



409



433Advertising expense


211



202



258Capital expenditures


230



456



357Assets at yearend


19,502



16,734



19,263Goodwill of acquired businesses (included in assets)

$
277,590


$
277,742


$
266,607Realized investment gains:Before taxes (included in revenues)

$



$
7,006


$
24,240After taxes (included in net income)






4,554



15,756Other items unrelated to business segments:Dividend and interest income

$
205


$
1,165


$
1,156Other revenues


4,076



3,990



3,870Income taxes


(3,501
)


726



808Net income (loss)


(6,923
)


(356
)


(73
)Depreciation and amortization


387



351



388Capital expenditures


755



95



419Assets at yearend


96,645



109,344



83,528Consolidated revenues (total of those set forth above)

$
813,331


$
798,954


$
630,924Consolidated assets (total of those set forth above)

$
3,401,426


$
3,050,695


$
3,113,009   Dollar amounts in thousands
    except for amounts per share
 60




---



##### 



WESCO FINANCIAL
    CORPORATION
  SCHEDULE I 
    CONDENSED FINANCIAL
  INFORMATION OF
    REGISTRANT
  BALANCE
    SHEET
 (Dollar
    amounts in thousands)
  December 31,2009


2008Assets:Cash and cash equivalents

$
18


$
33Investment in subsidiaries, at cost plus equity in
    subsidiaries undistributed earnings and unrealized
    appreciation


2,749,442



2,563,311$
2,749,460


$
2,563,344Liabilities and shareholders equity:Loans from subsidiaries

$
198,268


$
185,204Income taxes payable


128



62Other liabilities


347



322Total liabilities


198,743



185,588Shareholders equity (see consolidated balance sheet and
    statement of changes in shareholders equity)


2,550,717



2,377,756$
2,749,460


$
2,563,344   STATEMENT OF
    INCOME
    (Dollar amounts in thousands)
  Year Ended December 31,2009


2008


2007Revenues

$



$



$
Expenses:Intercompany interest


1,914



5,083



7,251General and administrative


1,041



1,277



1,0592,955



6,360



8,310Loss before items shown below


(2,955
)


(6,360
)


(8,310
)Income taxes


(1,034
)


(2,225
)


(2,908
)Equity in undistributed earnings of subsidiaries


55,994



86,251



114,563Net income

$
54,073


$
82,116


$
109,161   See notes to consolidated financial statements.
 61




---



##### 



WESCO FINANCIAL
    CORPORATION
  SCHEDULE I 
    CONDENSED FINANCIAL
  INFORMATION OF
    REGISTRANT (Continued)
  STATEMENT
    OF CASH FLOWS
 (Dollar
    amounts in thousands)
  Year Ended December 31,2009


2008


2007Cash flows from operating activities:Net income

$
54,073


$
82,116


$
109,161Adjustments to reconcile net income with cash flows from
    operating activities Change in income taxes payable currently


66



(417
)


1,026Equity in undistributed earnings of subsidiaries


(55,994
)


(86,251
)


(114,563
)Other, net


25



202



1Net cash flows from operating activities


(1,830
)


(4,350
)


(4,375
)Cash flows from financing activities:Borrowings from subsidiaries, net


13,064



15,331



15,052Payment of cash dividends


(11,249
)


(10,965
)


(10,679
)Net cash flows from financing activities


1,815



4,366



4,373Increase (decrease) in cash and cash equivalents


(15
)


16



(2
)Cash and cash equivalents  beginning of year


33



17



19Cash and cash equivalents  end of year

$
18


$
33


$
17   See notes to consolidated financial statements.
 62




---



##### 



Wesco Stock
    Performance Graph
    Comparison of
    Five Year Cumulative Return*
  Comparison of
    Cumulative Five Year Total Return
  
   *
    It would be difficult to develop a peer group of companies
    similar to Wesco. The Company owns subsidiaries engaged in a
    number of diverse business activities of which the most
    important is the property and casualty insurance business and,
    accordingly, management has used the Standard and Poors
    Property-Casualty Insurance Index for comparative purposes. 63