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WESCO FINANCIAL CORPORATION

301 East Colorado Boulevard

Suite 300

Pasadena, California 91101-1901

(626) 585-6700

November 8, 2005

Ms. Nili Shah

Accounting Branch Chief

Division of Corporate Finance

Securities and Exchange Commission

1 Station Place, N.E., Stop 0510

Washington, D.C., 20549

    Re:

    Wesco Financial Corporation

Form 10-K for the Year Ended December 31, 2004

File No. 1-4720

Dear Ms. Shah:

          The purpose of this letter is to respond to your letter dated September 27, 2005. To assist
you in reviewing our responses, we will precede each response with a copy (in bold type) of the
point as stated in your letter.

Form 10-K for the Fiscal Year Ended December 31, 2004

Item 2 — Properties, page 16

1. You disclose related party leasing arrangements, such as those with Blue Chip and NICO. In
future filings, if material, please disclose the amount of rental income for each of the periods
for which income statements are presented. Refer to paragraph 2 of SFAS 57 for guidance.

Total affiliated rental revenues have approximated $75,000.00 in each of the three most recent
years, which we believe is quantitatively and qualitatively immaterial. In the unlikely event
these revenues become material in the future, we will disclose the amounts in accordance with
the guidance in SFAS 57.

Management’s Discussion and Analysis, page 19

Results of Operations, page 20

2. We note that your discussion related to consolidated net income and insurance segment net
income uses an “underwriting income” measure of financial performance. We believe this measure to
be a non-GAAP financial measure. In future filings, please revise this disclosure to comply with
item 10 of Regulation S-K. If you disagree, explain to us how use of this measure is acceptable
under Item 10.

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We believe you are referring to our use of the term “underwriting gain,” which appears in
“Management’s Discussion and Analysis.” “Underwriting gain” represents the arithmetic
difference between two line items from our 2004 consolidated statement of income, each of which
is determined in accordance with GAAP: (i) insurance premiums earned and (ii) insurance losses,
loss adjustment and underwriting expenses. We believe the insurance business consists of two
distinct activities — underwriting and investing. Accordingly, we believe that presentation
and discussion of these activities as separate components within the insurance segment is
required to comply with the spirit of the SEC’s guidance on the content of “Management’s
Discussion and Analysis.” In future filings, we will better define “underwriting gain” so that
investors can refer to the component GAAP line items on our consolidated statement of income.
We will also include each such GAAP line item in the table summarizing the results of our
insurance segment operations so that investors can see our actual calculation of “underwriting
gain.”

3. In future filings, please include in management’s discussion and analysis a more robust
discussion of the more likely than not impact the payment of claims will have on known trends and
uncertainties, in particular cash outflows from operations. Discuss whether there are any
significant variations between the maturity of your investments and the expected payment of your
loss reserves and the impact of selling securities before anticipated or the use of credit
facilities to pay for policy liabilities will have on your future liquidity and results of operations. Link this
discussion to the table of contractual obligations.

In future filings, we will address the items identified in your comment in connection with our
discussion of the impact of the payment of claims on operating cash flows and liquidity. We
will also link our discussion to the table of contractual obligations.

4. Please disclose in further detail the judgments and uncertainties surrounding the estimates
related to the reserve for loss and loss adjustment expenses and the potential impact on your
financial statements. In this regard, in future filings, please revise your management’s
discussion and analysis to include the following information for each of your lines of business:

a) Please disclose the reserves accrued as of the latest balance sheet date presented that includes
a breakout between case reserves and IBNR reserves. The total of these amounts should agree to the
amount presented on the balance sheet.

b) Please disclose the range of loss reserve estimates as determined by your actuaries. Discuss
the key assumptions used to arrive at management’s best estimate of loss reserves within that range
and what specific factors led management to believe this amount rather than any other amount within
the range represented the best estimate of incurred losses.

c) For each line of your longer tail business, please provide more precise insight into the
existence and effects on future operations and financial condition of known

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trends, events and uncertainties. Disclosure you should consider, but not be limited to, includes
the following information:

    •

    the number of claims pending at each balance sheet date;

    •

    the number of claims reported for each period presented;

    •

    the number of claims dismissed, settled, or otherwise resolved for each period;

    •

    the nature of the claims including relevant characteristics of the claimant
population (e.g., involves a large number of relatively small individual claims of a
similar type);

    •

    the cost of administering the claims;

    •

    emerging trends that may result in future reserve adjustments; and

    •

    if management is unable to estimate the possible loss or range of loss, a statement
to that effect.

In general, we believe our disclosures regarding loss reserves and the process of establishing
loss reserves that were made in the “Critical Accounting Policies and Practices” and the
“Results of Operations — Insurance Segment” sections of “Management’s Discussion and Analysis”
in our 2004 Form 10-K were informative and responsive to SEC rules. Still, we appreciate your
suggestions toward improving our disclosures with respect to the judgments and uncertainties
surrounding the estimate of our reserve for loss and loss adjustment expenses and the potential
impact on our financial statements. Accordingly, in future filings we will provide additional
disclosures, as applicable, to better explain the likelihood that materially different amounts
would be reported under different conditions or if we used different assumptions. We intend to
provide such disclosures beginning with our annual report on Form 10-K for the year ending
December 31, 2005.

Insurance Segment, page 21

5. It appears that your insurance segment accounted for 86% of your consolidated net income. In
future filings, please provide information about the quality of, and potential variability of, your
earnings and cash flow, so that investors can ascertain the likelihood that past performance is
indicative of future performance. In this respect, please identify and address those key variables
and other qualitative and quantitative factors which are peculiar to and necessary for an
understanding and evaluation of your company. Refer to SEC Release 33-8350 Interpretation:
Commission Guidance Regarding Management’s Discussion and Analysis of Financial Condition and
Results of Operations for guidance.

In future filings, we will include a discussion of the key qualitative, quantitative and other
factors deemed to significantly affect the variability of earnings and cash flow to provide
more meaningful information to investors.

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Contractual Obligations, page 27

6. In future filings, please include your loss reserve to be paid in the contractual obligation
table, as it appears that these liabilities represent future legal obligations. Due to the
significance of these liabilities, we believe the inclusion of reserves in the contractual
obligation table will provide investors increased disclosure of your liquidity.

In future filings, we will include insurance losses and loss adjustment expense reserves in the
table of contractual obligations.

Critical Accounting Policies, page 27

7. We note that you set your claim reserves for your property catastrophe reinsurance operations
based upon information you receive from the cedant. If this poses a potential for a higher degree
of uncertainty related to your estimate of assumed loss reserves as compared to direct loss
reserves, please include disclosures relating to your critical accounting policy of this
uncertainty, including the risks associated with making estimates, and the effects and expected
effects of the uncertainty on financial position and results of operations. Also in this
disclosure, please disclose the following:

    •

    The dollar amount of reserves recorded based on information received from the
cedants and the nature and extent of the information received from the cedants related
to policies, claims, unearned premiums and loss reserves;

    •

    The time lag from when claims are reported to the cedant to when the cedant reports
them to you and whether, how and to what extent this time lag effects your loss
reserve estimate;

    •

    The amount of any backlog related to the processing of assumed reinsurance
information, whether the backlog has been reserved for in the financial statements
and, if applicable, when the backlog will be resolved;

    •

    What process management performs to determine the accuracy and completeness of the
information received from the cedants;

    •

    How management resolves disputes with cedants and how often disputes occur;

    •

    How management uses the information received from the cedants in its determination
of its assumed loss reserves, and whether reinsurance intermediaries are used to
transact and service reinsurance policies and how that impacts your loss reserving
methodology, and

    •

    Whether management uses historical loss information to validate its existing
reserves and/or as a means of noticing unusual trends in the information received from
the cedants.

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Based on our reinsurance business currently in effect, we do not believe that the estimates
required for premiums, losses and expenses as a result of using information provided by ceding
companies poses a materially higher degree of uncertainty than using information from direct
business. We will continue to routinely assess whether the uncertainty inherent in such
estimates is material to our results of operations and financial position and, if so, we will
make appropriate disclosures in future filings. We will also disclose in future filings
additional information as to the process used in determining the accuracy and completeness of
the information from cedants, material information as to the resolution of disputes, how we
assess the loss reserves reported by cedants, and the other items noted in your comment to the
extent they are relevant and material under the circumstances.

Goodwill, page 28

8. We have read your current disclosure relating to your critical accounting policy for goodwill
and have the following comments:

    •

    In future filings, please address material implications of uncertainties associated
with your assumptions and estimates underlying your evaluation of goodwill impairment.
Such disclosure should supplement, not duplicate, the description of accounting policies
that are already disclosed in the notes to the financial statements. Since critical
accounting estimates and assumptions are based on matters that are highly uncertain, you
should analyze their specific sensitivity to change, based on other outcomes that are
reasonably likely to occur and would have a material effect. Refer to SEC Release 33-8350
Interpretation: Commission Guidance Regarding Management’s Discussion and Analysis of
Financial Condition and Results of Operations for guidance.

In future filings, we will address material implications of uncertainties associated with our
assumptions and estimates underlying our evaluation of goodwill impairment.

    •

    We note that segment net income for the furniture rental segment from 2000 to 2004 was
$33,371, $13,076, $2,442, $(6,257), and $5,022. We acknowledge the improvement in
earnings from 2003 to 2004; however, it does not appear that the segment is performing or
benefiting from the earnings experienced in 2000 or 2001. Although the assessment for
impairment of goodwill is not isolated to one factor but several assumptions, please tell
us what factors supported your conclusion that goodwill was not impaired as of December
31, 2004.

    •

    To the extent that goodwill impairment tests have identified circumstances in which
goodwill impairment is likely in a future period, such as declining headroom between the
fair value and the carrying value of your reporting

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    units, please disclose such circumstances in your operating and financial review and
prospects.

When we purchased CORT, a leader in the rent-to-rent furniture rental business, in early 2000,
its furniture rental business was rapidly growing due to the strong U.S. economy, broad-based
business expansion and the growth of IPOs and the high-tech sector.

Beginning in late 2000, however, CORT experienced a decline in new furniture rental business.
Then, with the burst of the dot-com bubble, the events of September 11, and a protracted
slowdown in new business formation, furniture segment revenues and earnings decreased.

We view the furniture rental business as being cyclical, with periods of expansion and
contraction, thus producing uneven periodic earnings. We believe that the factors cited above,
adversely impacted the cycle. We also view the affects from these factors as temporary in
nature. Furthermore, CORT has continued to operate at a positive cash flow ever since our
acquisition.

The decline in total furniture segment aggregate operating results during the 2000 to 2004
period reflected losses generated by a new business operation, Relocation Central Corp., which
was formed shortly after we acquired CORT. This business was intended to enhance the existing
core furniture rental business model and was expected to produce long-term benefits despite
expected near-term operating losses. In considering whether goodwill of CORT was impaired, we
believe it is appropriate to discount the short-term impact of those losses on segment earnings
when evaluating the value of the business, which by its nature is based on long-term earnings
expectations.

Following is a disaggregation of furniture segment operating results to illustrate the impact
that the start-up operation had on total segment results. Results for the first nine months of
2005 are provided for illustration. Amounts are in millions.

    9 mo

    2000

    2001

    2002

    2003

    2004

    2005

    Furniture Segment net income (loss)

    $
    33.4

    $
    13.1

    $
    2.4

    ($6.3
    )

    $
    5.0

    $
    16.3

    Relocation Central net income (loss)

    —

    (7.0
    )

    (8.3
    )

    (9.0
    )

    (7.4
    )

    (3.5
    )

    Net income before Relocation Central

    $
    33.4

    $
    20.1

    $
    10.7

    $
    2.7

    $
    12.4

    $
    19.8

Additional factors supporting the conclusion that goodwill was not impaired as of December
31, 2004 included:

    •

    CORT remains a leader in the rent-to-rent furniture market.

    •

    Assumptions used in estimating the fair value, including projections of future
earnings, discount rates and other factors were believed to be reasonably conservative
under the circumstances.

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    •

    The estimated fair value of the enterprise was slightly in excess of carrying value
at December 31, 2004.

    •

    CORT has made selected acquisitions for cash since 2000 totaling $80 million, while
operating at a