Wesco Financial

Wesco Financial Corporation was an American diversified financial corporation headquartered in Pasadena, California. It began as the holding company for Mutual Savings, a savings and loan association, and later developed into a compact collection of operating businesses and investment interests associated with Berkshire Hathaway. Its principal activities ultimately fell into three broad categories: insurance, furniture rental, and steel service, with commercial real estate held through MS Property Company. The company’s corporate history was closely connected with Blue Chip Stamps and Berkshire Hathaway. For many years, Blue Chip Stamps owned approximately 80.1% of Wesco. Blue Chip Stamps subsequently became wholly owned by Berkshire Hathaway, the investment and operating group controlled by Warren Buffett. This ownership structure made Wesco part of the Berkshire orbit while it retained its own corporate identity and operating subsidiaries. Wesco’s original thrift-related business changed substantially during the late twentieth century. Mutual Savings’ savings-and-loan operations were sold to CenFed Bank in 1993, leaving Wesco focused on other financial and industrial activities. Wesco later owned or controlled insurance companies, a national furniture-rental business, and steel-service operations. Its insurance platform included Wesco-Financial Insurance Company, a property-and-casualty insurer incorporated in 1985, and Kansas Bankers Surety Company, a specialist insurer acquired in 1996 that served banking customers. Its non-insurance operations included CORT Business Services, which operated in furniture rental, and Precision Steel Warehouse, a steel-service-center business with locations including Chicago and Charlotte, North Carolina. Wesco also held commercial real estate in Pasadena through MS Property Company. The company was particularly identified with Charlie Munger, Warren Buffett’s longtime business partner and Berkshire Hathaway’s vice-chairman. Munger served as Wesco’s chairman and chief executive from 1984 through 2011. He was known for a direct, analytical communication style and for the extended question-and-answer exchanges associated with Wesco’s shareholder meetings in Pasadena. Observers sometimes described Wesco as a smaller version of Berkshire Hathaway because of its combination of insurance operations, operating subsidiaries, and a portfolio of public-company investments. Buffett and Munger cautioned shareholders against treating the comparison as exact, however, because Wesco was materially smaller and had a different corporate structure and business mix. In June 2011, Berkshire Hathaway acquired the approximately 20% of Wesco that it did not already own. The transaction made Wesco a wholly owned Berkshire Hathaway subsidiary and ended its existence as a separately held public company. After the acquisition, Wesco’s insurance subsidiaries were integrated into Berkshire-related insurance operations: Wesco-Financial Insurance became part of National Indemnity, while Kansas Bankers Surety became part of Berkshire Hathaway Homestate Companies. The transaction marked the end of Wesco as an independent listed corporate vehicle, although its operating businesses and assets were absorbed or continued within the Berkshire organization.

Wesco Financial developed from a savings-and-loan holding-company structure into a diversified group of financial and operating businesses. Its original connection was Mutual Savings, a thrift institution whose operations represented the company’s early financial focus. In 1993, the thrift operations were sold to CenFed Bank, significantly changing Wesco’s business profile. Wesco’s later identity was shaped by its ownership relationship with Blue Chip Stamps and Berkshire Hathaway. Blue Chip Stamps held approximately 80.1% of Wesco for an extended period. As Blue Chip Stamps became wholly owned by Berkshire Hathaway, Wesco became part of the broader Berkshire network while continuing to operate through its own subsidiaries and investments. The relationship also connected Wesco with Warren Buffett and Charlie Munger, although Wesco remained a smaller and separately organized company for much of this period. Charlie Munger served as Wesco’s chairman and chief executive from 1984 to 2011. His leadership gave the company a distinctive public profile. Wesco shareholder meetings in Pasadena became known for lengthy, candid exchanges between Munger and outside investors. Because Wesco combined insurance activities, operating subsidiaries, and investments in large public companies, some observers compared it with a miniature Berkshire Hathaway. Buffett and Munger rejected the idea that the comparison should be treated as a precise description of Wesco’s scale, economics, or structure. The company’s principal operating categories were insurance, furniture rental, and steel service. Wesco-Financial Insurance Company, incorporated in 1985, conducted property-and-casualty insurance business and later became part of National Indemnity. Kansas Bankers Surety Company, founded in 1909 and acquired by Wesco in 1996, provided specialized coverages for banks and was later placed within Berkshire Hathaway Homestate Companies. CORT Business Services operated the furniture-rental business. Precision Steel Warehouse, founded in 1940 and acquired by Wesco in 1979, operated steel service centers, including facilities in Chicago and Charlotte, North Carolina. MS Property Company held commercial real estate in Pasadena. Wesco also held shares in several companies that were associated with Berkshire’s investment portfolio, including Coca-Cola, Kraft Foods, Procter & Gamble, and Wells Fargo. These holdings reinforced the perception that Wesco operated as a smaller Berkshire-related investment and operating platform, although its core identity rested on its subsidiaries as much as on its securities portfolio. In June 2011, Berkshire Hathaway purchased the approximately 20% of Wesco that it did not already own. Wesco thereby became a wholly owned Berkshire Hathaway subsidiary. The transaction ended Wesco’s role as an independently held public company and effectively concluded its history as a standalone corporate brand. Its insurance businesses were subsequently aligned with Berkshire insurance operations, while its other businesses and assets continued under the ownership and management structure of Berkshire Hathaway.

• 2011

  Wesco becomes wholly owned by Berkshire Hathaway

  [1]Wesco Financialen.wikipedia.org

  Berkshire Hathaway acquired the approximately 20% of Wesco it did not already own, ending Wesco’s independent public-company status.

• 1996

  Wesco acquires Kansas Bankers Surety

  [1]Wesco Financialen.wikipedia.org

  Wesco purchased Kansas Bankers Surety, expanding its insurance activities into specialized coverage for banks.

• 1993

  Mutual Savings operations are divested

  [1]Wesco Financialen.wikipedia.org

  The thrift operations of Mutual Savings were sold to CenFed Bank, moving Wesco away from its original savings-and-loan focus.

• 1985

  Wesco-Financial Insurance Company is incorporated

  [1]Wesco Financialen.wikipedia.org

  Wesco established its property-and-casualty insurance subsidiary, which later became part of National Indemnity.

• 1984

  Charlie Munger becomes chairman and chief executive

  [1]Wesco Financialen.wikipedia.org

  Charlie Munger began his long tenure as Wesco’s chairman and chief executive.

• 1979

  Precision Steel Warehouse is acquired

  [1]Wesco Financialen.wikipedia.org

  Wesco acquired Precision Steel Warehouse, adding steel service centers to its diversified operating portfolio.

• 1940

  Precision Steel Warehouse is founded

  [1]Wesco Financialen.wikipedia.org

  Precision Steel Warehouse was established as a steel-service business and later became a Wesco subsidiary.

• 1909

  Kansas Bankers Surety is established

  [1]Wesco Financialen.wikipedia.org

  Kansas Bankers Surety Company was founded as a specialist insurer serving banking-sector customers; Wesco later acquired it.

A diversified financial and operating holding company associated with Berkshire Hathaway, combining insurance and reinsurance capabilities with furniture rental, steel service, real estate, and investment holdings.

• Property and casualty insurance · 1985

  Wesco-Financial Insurance

  Wesco-Financial Insurance Company was incorporated in 1985 and conducted property-and-casualty insurance business within Wesco’s diversified corporate structure. Following Berkshire Hathaway’s acquisition of the remaining Wesco shares, the insurer became part of National Indemnity, aligning it with Berkshire’s wider insurance organization.

• Specialized bank insurance · 1909

  Kansas Bankers Surety

  Kansas Bankers Surety was founded in 1909 and specialized in insurance coverages for banks and related financial institutions. Wesco acquired the company in 1996. After Wesco became wholly owned by Berkshire Hathaway, Kansas Bankers Surety became part of Berkshire Hathaway Homestate Companies.

• Furniture rental

  CORT Business Services

  CORT Business Services was Wesco’s furniture-rental operation. It represented one of the company’s major non-insurance business lines and broadened Wesco’s activities beyond financial services and investment holdings.

• Steel service · 1940

  Precision Steel Warehouse

  Precision Steel Warehouse operated steel service centers and was founded in 1940 before being acquired by Wesco in 1979. Its facilities included locations in Chicago and Charlotte, North Carolina, giving Wesco an industrial distribution business alongside its insurance and furniture-rental activities.

• Commercial real estate

  MS Property Company

  MS Property Company held commercial real estate in Pasadena. The business formed part of Wesco’s portfolio of operating and asset-owning subsidiaries rather than a consumer-facing branded product line.

• 2011

  Berkshire Hathaway acquires the remaining Wesco sharesM&A

  Background

  Berkshire Hathaway already controlled most of Wesco through its ownership relationship with Blue Chip Stamps but did not own approximately 20% of Wesco directly.

  Action taken

  Berkshire Hathaway acquired the remaining approximately 20% interest in June 2011.

  Aftermath

  Wesco became a wholly owned Berkshire Hathaway subsidiary and ceased to exist as an independently held public company. Its insurance subsidiaries were aligned with Berkshire insurance businesses.

  Source

• 1993

  Exit from thrift operationsStrategy

  Background

  Mutual Savings’ savings-and-loan operations represented Wesco’s original thrift-oriented business.

  Action taken

  Wesco sold the thrift operations to CenFed Bank and continued with a more diversified mix of insurance, operating businesses, and investments.

  Aftermath

  The divestiture reduced Wesco’s direct exposure to savings-and-loan banking and helped define its later diversified holding-company model.

  Source

1. 1Wesco Financialen.wikipedia.org