WESCO FINANCIAL CORPORATION

301 EAST COLORADO BOULEVARD, SUITE 300, PASADENA, CALIFORNIA 91101-1901

(626) 585-6700

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MAY 11, 2006

       The annual meeting of shareholders of Wesco Financial Corporation (“Wesco”) will be held at the Hilton Pasadena, 168 South Los Robles Avenue, Pasadena, California 91101, on Thursday, May 11, 2006 at 2:00 p.m. for the following purposes:

      The Board of Directors has fixed March 15, 2006, as of the close of business, as the record date for the determination of shareholders entitled to this notice and to vote at such annual meeting or any adjournment or adjournments thereof. A list of the shareholders as of such record date will be open to examination by any shareholder for any purpose germane to the meeting during ordinary business hours at Wesco’s principal office at 301 East Colorado Boulevard, Suite 300, Pasadena, California for a period of at least ten days prior to May 11, 2006.

      All shareholders are requested to complete, sign and date the enclosed form of proxy promptly and return it in the accompanying postage-prepaid, self-addressed envelope, whether or not they expect to attend the meeting, to assure that their shares will be represented. Any shareholder giving a proxy has the right to revoke it at any time before it is voted at the meeting.

Pasadena, California

March 30, 2006

IMPORTANT

      Whether or not you expect to attend the annual meeting, please complete, sign and date the enclosed form of proxy and return it promptly in the enclosed envelope.

      Requests for additional copies of this combined Notice and Proxy Statement should be mailed to Margery A. Patrick, Secretary, Wesco Financial Corporation, at the above address, or faxed to her at (626) 449-1455.

      As stated above, Wesco’s annual shareholders’ meeting will be held at the Hilton Pasadena, 168 South Los Robles Avenue (corner of Cordova Street), in Pasadena, California, at 2:00 p.m., on Thursday, May 11, 2006. The Hilton’s adjoining parking structure may be accessed from Cordova Street, which runs east-west to the south of the hotel.

WESCO FINANCIAL CORPORATION

301 EAST COLORADO BOULEVARD, SUITE 300, PASADENA, CALIFORNIA 91101-1901

(626) 585-6700

PROXY STATEMENT

FOR ANNUAL MEETING OF SHAREHOLDERS

MAY 11, 2006

       This proxy statement (“Proxy Statement”) is furnished in connection with the solicitation by the board of directors of Wesco Financial Corporation (“Wesco”) of proxies to be voted at the May 11, 2006 annual meeting of the shareholders of Wesco (“Annual Meeting”). This Proxy Statement is expected to be mailed to shareholders on or about March 22, 2006, together with Wesco’s combined annual report to shareholders and annual report to the Securities and Exchange Commission (“SEC”) on Form 10-K for the calendar year ended December 31, 2005.

PROXIES AND REVOCATION

      The shares represented by each properly executed, unrevoked form of proxy received in time for the meeting will be voted in accordance with the instructions contained therein. Any shareholder giving a proxy has the power to revoke it at any time before it is voted at the meeting by filing with the Secretary of Wesco at 301 East Colorado Boulevard, Suite 300, Pasadena, California 91101-1901, a written revocation or a properly executed proxy bearing a later date, or by voting in person at the meeting.

      Wesco intends to solicit proxies principally by the use of the mail. It will also request banks, brokerage firms and other custodians, nominees and fiduciaries to forward copies of the form of proxy and Proxy Statement to persons for whom they hold stock of Wesco and request authority for the execution of proxies. Wesco will reimburse such banks, brokerage firms and other custodians, nominees and fiduciaries for their actual expenditures incurred in connection therewith at not higher than usual and customary rates; facsimile transmissions are not considered necessary, and expenditures related thereto will not be reimbursed. Officers of Wesco may solicit proxies to a very limited extent by telephone, but without incremental cost to Wesco, except for actual out-of-pocket communication charges, which are expected to be insignificant. Thus, the cost of soliciting proxies will be paid by Wesco.

ELECTION OF DIRECTORS

      At the Annual Meeting, the six nominees for Director receiving the highest number of affirmative votes will be elected Wesco directors (“Directors”). Each elected Director shall serve until the election and qualification of his or her respective successor (expected to be at the annual meeting to be held in May 2007) or upon earlier resignation (not currently anticipated). Each nominee currently serves as a Director and has been nominated by Wesco’s Board of Directors (the “Board”). Set forth below for each nominee is his or her principal occupation, business experience during at least the past five years, age, and certain other information.

EXECUTIVE OFFICERS

      In addition to Mr. Munger, Wesco has three executive officers, who are listed below. All officers are elected by the newly elected Board to serve for the next twelve months or until their successors have been elected and qualified. Set forth below for each executive officer other than Mr. Munger is his principal occupation, business experience during at least the past five years, age, and certain other information.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

      On March 15, 2006, the record date for determination of shareholders entitled to notice of and to vote at the Annual Meeting, a total of 7,119,807 shares of capital stock were outstanding. Such shares are the only voting securities of Wesco. All information regarding stock ownership is given as of the close of business on March 15, 2006.

      Shareholders have the right to elect Directors by cumulative voting in accordance with Wesco’s bylaws: Each share has votes equal to the number of Directors to be elected (six), and the votes may be cast for one candidate or distributed among two or more candidates. On all other matters, each share has one vote. Votes withheld as to specific Directors on forms of proxy are treated as votes cast in determining if a quorum is present to transact business but are excluded from the votes cast in favor of such Directors. Any portion of the shares held by a broker or other party that is not voted on an omnibus proxy is neither counted in determining if a quorum is present nor treated as votes cast for any purpose. A majority of Wesco’s outstanding capital shares as of March 15, 2006 must be represented in person or by proxy to constitute a quorum for the Annual Meeting.

      The persons appointed by the Board as proxies on the accompanying form of proxy have informed the Board of their intent to distribute, in such proportion as they see fit, the authorized votes represented by proxies (i) in favor of the election of the six nominees named above, or (ii), in the event one or more of said nominees is or are unable to serve, for the remainder of the nominees named above supplemented by any substitute nominee or nominees selected by the Board.

      Blue Chip, a wholly owned subsidiary of Berkshire, owns 5,703,087 shares (80.1%) of Wesco capital stock. Warren E. Buffett, Chairman of the Board and Chief Executive Officer of Berkshire, has sole voting power with respect to 39.5% of Berkshire’s common stock. Mr. Buffett may be deemed to be in control of Berkshire; and Mr. Buffett, as well as Berkshire, may be deemed to be in control of Blue Chip and Wesco. Charles T. Munger, Chairman of the Board and President of Wesco, is also Vice Chairman of the Board of Berkshire; he has sole voting power with respect to 1.3% of Berkshire’s common stock. Mr. Munger consults with Mr. Buffett with respect to Wesco’s investment decisions and major capital allocations. No other Director or executive officer of Wesco owns more than one percent of any class of Berkshire common stock,

and the amount of Berkshire common stock owned in the aggregate by all Wesco Directors and executive officers (other than Mr. Munger) is less than one percent of each class of Berkshire common stock.

      Wesco-Financial Insurance Company (“Wes-FIC”), a wholly owned subsidiary of Wesco, is headquartered in Omaha, Nebraska, where its business is administered by employees of wholly owned insurance subsidiaries of Berkshire. From time to time, Berkshire has offered to Wes-FIC, and Wes-FIC (with Wesco’s concurrence) has accepted, retrocessions of portions of reinsurance contracts under arrangements described on page 11 of Wesco’s 2005 Annual Report on Form 10-K. Wesco’s and Wes-FIC’s boards believe all such retrocessions have been entered into at terms more favorable than Wes-FIC could have obtained elsewhere. Kansas Bankers Surety Company (“KBS”), wholly owned by Wes-FIC, is supervised by Berkshire subsidiaries. In 2005 KBS ceded 50% of a layer of loss exposure to an unaffiliated reinsurer and the other 50% to a Berkshire subsidiary, on identical terms. A layer of losses above such layer was 30%-retained by KBS; the other 70% was reinsured by another Berkshire insurance subsidiary. In 2005, premiums of $2,147,000 were ceded to Berkshire subsidiaries; incurred reinsured losses aggregating $125,000 were allocated to them. In addition, Berkshire subsidiaries in 2005 received $92,000 in administrative fees and expense reimbursements relative to Wes-FIC and KBS.

      Robert T. Flaherty, a Wesco Director, owns a significant portion of the stock of Flaherty & Crumrine Incorporated, which leases office space in the commercial office building owned by Wesco’s MS Property Company subsidiary. Terms of the lease are believed by Wesco’s management to be within the general market range for such third-party leases. Wesco’s subsidiary received $86,728 under the lease during 2005.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      Wesco’s capital stock is the only class of outstanding capital stock. Blue Chip is the only organization or individual known to Wesco’s management to own beneficially 5% or more of its outstanding capital stock. Beneficial ownership of Wesco’s capital stock by Blue Chip and by all Directors and executive officers who own shares is set forth below.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section 16(a) of the Securities Exchange Act of 1934 ( the “Exchange Act”) requires Wesco’s executive officers and Directors, and persons who own more than ten percent of Wesco’s outstanding capital stock, to file reports of ownership and changes in ownership with the SEC. Copies of all such Section 16(a) reports must be furnished to Wesco.

      Based solely on its review of the copies of such Section 16(a) reports received by it, and representations from certain persons subject to Section 16(a) reporting that no such reports were required to be filed, Wesco believes that its executive officers, Directors, and beneficial owners of more than ten percent filed all such required reports on a timely basis during 2005.

BOARD OF DIRECTORS INTERLOCKS AND INSIDER PARTICIPATION

      Charles T. Munger, Chairman of the Board, President and Chief Executive Officer of Wesco, is also Chairman of the Board of Blue Chip and Vice Chairman of the Board of Berkshire. Robert H. Bird, who was a Director and President of Wesco through the date of his retirement in May 2005, is also a director of and President of Blue Chip. Jeffrey L. Jacobson, Vice President and Chief Financial Officer of Wesco, is also a director of and Vice President and Chief Financial Officer of Blue Chip.

DIRECTOR INDEPENDENCE, COMMITTEES AND MEETINGS

      Because 80.1% of Wesco’s capital stock is owned by Blue Chip, the Board has determined that Wesco is a “controlled company” within the meaning of Section 801 of the listing standards of the American Stock Exchange (“AMEX”), on which Wesco’s shares are traded. Controlled companies are exempted from a number of AMEX listing standards, including the requirement to have a majority of independent directors and the requirement to have director nominees selected by a nominating committee comprised entirely of independent directors or by a majority of the independent directors. Controlled companies are also exempt from the requirement to have the compensation of the issuer’s officers determined by a compensation committee comprised solely of independent directors or by a majority of the board’s independent directors.

      Nonetheless, the Board has affirmatively determined that Carolyn H. Carlburg, Robert T. Flaherty, Peter D. Kaufman and Elizabeth Caspers Peters are “independent” as defined in Section 121(A) of the AMEX listing standards.

      Wesco has a standing audit committee (“Audit Committee”) established in accordance with Section 3(a)(58)(A) of the Exchange Act that is responsible for assisting the Board in fulfilling its responsibilities as they relate to Wesco’s accounting policies, internal controls and financial reporting practices. The members of the Audit Committee are Carolyn H. Carlburg (Chair), Robert T. Flaherty and Peter D. Kaufman. The Board has determined that each of these Directors is independent in accordance with AMEX listing standards, and with Rule 10A-3 promulgated under the Exchange Act. The Board has determined that Messrs. Flaherty and Kaufman are each “audit committee financial experts” as that term is used in Item 401 of Regulation S-K promulgated under the Exchange Act.

      The Audit Committee is the only standing committee of the Board. Wesco does not have a nominating committee or a compensation committee. Wesco’s nominating process is described below under “Nominations,” and its compensation program is described in the “Board of Directors’ Report on Executive Compensation” on page 8.

      During 2005, the Directors held four regularly scheduled Board meetings and the Audit Committee held five meetings. No Director attended fewer than 75 percent of the combined total number of meetings of the Board and Audit Committee (if a member thereof) held during the year. Wesco does not require its Directors to attend annual meetings of shareholders, but all current Directors attended the 2005 annual meeting.

NOMINATIONS

      There is no standing nominating committee, and the entire Board is responsible for selecting nominees for election as Directors. Wesco believes that the Board is able to fully consider and select appropriate nominees for election to the Board without delegating that responsibility to a committee of independent Directors or adopting formal procedures. Candidates have traditionally been recommended to the Board by Mr. Munger or one of the other Directors, and there is not a formal process for identifying or evaluating new Director nominees. Candidates recommended by shareholders will be evaluated in the same manner as candidates recommended by others, although the Board may prefer candidates of good repute who are personally known to Directors. The Board will consider all relevant qualifications as well as the needs of Wesco in terms of compliance with AMEX listing standards and SEC rules.

      A shareholder wishing to recommend a candidate for Director should send a letter to Wesco Financial Corporation, attention of the Secretary, at 301 East Colorado Boulevard, Suite 300, Pasadena, California 91101-1901. The mailing envelope must contain a clear notation indicating that the enclosed letter is a “Director Nominee Recommendation.” The letter must identify the author as a shareholder and provide a brief summary of the candidate’s qualifications, as well as contact information for both the candidate and the shareholder. At a minimum, candidates for election to the Board should meet the independence requirements of Section 121(A) of the AMEX listing standards and Rule 10A-3 under the Exchange Act. Candidates should also have relevant business and financial experience, and they must be able to read and understand fundamental financial statements.

SHAREHOLDER COMMUNICATION WITH THE BOARD

      Shareholders who wish to communicate with the Board or with a particular Director may send a letter to the attention of the Secretary, Wesco Financial Corporation, at 301 East Colorado Boulevard, Suite 300, Pasadena, California 91101-1901. The mailing envelope must contain a clear notation indicating that the enclosed letter is a “Shareholder-Board Communication” or “Shareholder-Director Communication.” All such letters must identify the author as a shareholder and clearly state whether the intended recipients are all of the members of the Board or just certain specified individual Directors. The Secretary will make copies of all such letters and forward them to the appropriate Director or Directors.

CODE OF BUSINESS CONDUCT AND ETHICS

      Wesco has adopted a Code of Business Conduct and Ethics (the “Code”) applicable to its Directors, officers and employees and those of its subsidiaries. A copy of the Code may be accessed through Wesco’s website, www.wescofinancial.com.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

      Directors who are not officers currently receive fees totaling $9,000 per year, plus $750 for each special meeting which they attend. The Chair of the Audit Committee currently receives additional fees totaling $9,000 per year, and other Audit Committee members receive $750 for each committee meeting attended.

      The following table shows compensation paid by Wesco and its subsidiaries to its executive officers for the three years ended December 31, 2005.

BOARD OF DIRECTORS’ REPORT ON EXECUTIVE COMPENSATION*

      Wesco’s program of executive compensation is believed different from most public corporations’ programs. Messrs. Munger, Jacobson and Greco are not employees of Wesco or a Wesco subsidiary, nor was Mr. Bird; nor are they or have they been remunerated directly by Wesco or a Wesco subsidiary for their services. All four have been employed by Blue Chip. Messrs. Munger, Bird and Jacobson are directors, and Mr. Munger is chairman of the board, of Blue Chip. Wesco and its subsidiaries reimburse Blue Chip for the services of Messrs. Jacobson, Greco, and, prior to his retirement, Mr. Bird, based on Blue Chip’s cost of their compensation, including related taxes and benefits, and an estimate of the relative time each individual has devoted to the business of each company. Wesco and its subsidiaries do not reimburse Blue Chip for Mr. Munger’s services. Mr. Sahm, who does not work for Blue Chip, is compensated based on factors such as his individual performance, changes in responsibilities and inflation.

      The Board, at least annually, reviews and approves the compensation of, or any reimbursement to Blue Chip for, Wesco’s executive officers based on the recommendation of Mr. Munger. Factors considered by Mr. Munger are typically subjective and include individual performance, changes in responsibility and inflation. Neither the profitability of Wesco nor the market price of Wesco’s stock is considered in setting executive compensation.

STOCK PERFORMANCE GRAPH

      The following graph compares the value at each subsequent yearend of $100 invested in Wesco capital stock on December 31, 2000 with identical investments in the Standard and Poor’s (“S&P”) 500 Stock Index and the S&P Property-Casualty Insurance Index, assuming reinvestment of dividends.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

      Wesco’s consolidated financial statements are required to be included in the consolidated financial statements of its 80.1% parent, Berkshire. Accordingly, to facilitate the efficient examination of the statements of both companies, Wesco’s Audit Committee, effective with the year 2004, delegated to Berkshire’s audit committee authority to engage a public accounting firm to audit Wesco’s consolidated financial statements, as well as the authority to pre-approve other audit and non-audit services for Wesco. Deloitte & Touche LLP (“Deloitte”) was selected by Berkshire’s audit committee for 2005 and the appointment was ratified by Wesco’s Audit Committee. Berkshire’s audit committee has not yet selected Wesco’s independent auditors for the year 2006. Representatives of Deloitte are expected to be present at the Annual Meeting. They will be given an opportunity to make a statement if they so desire and to respond to any appropriate questions.

      Audit Fees. In 2005, Berkshire allocated to Wesco $650,000 representing Wesco’s share of billings by Deloitte for the audits of the 2005 consolidated financial statements of Berkshire and all of its subsidiaries including Wesco and its subsidiaries. Such services included testing required by the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) as well as reviews of the financial statements included in Wesco’s Quarterly Reports to the SEC on Form 10-Q for 2005. In 2004, Berkshire allocated to Wesco $565,000 for Deloitte’s audit services.

      Audit-Related Fees. In 2005, Deloitte was paid $24,500 by Wesco in connection with its assistance with communications received by Wesco from the Securities and Exchange Commission in connection with its review of Wesco’s 2004 Annual Report on Form 10-K. In 2004, a Wesco subsidiary retained Deloitte to assist with Sarbanes-Oxley readiness, for which Deloitte was paid $250,000. There were no other audit-related fees billed by Deloitte or allocated by Berkshire in 2005 or 2004.

      Tax Fees. There were no fees billed by Deloitte or allocated by Berkshire in either 2005 or 2004 for tax compliance, tax advice or tax planning for Wesco or its subsidiaries.

      All Other Fees. There were no fees billed by Deloitte or allocated by Berkshire in either 2005 or 2004 other than those set forth above.

      Audit Fees Pre-approval Policy. Beginning in 2004, Wesco’s Audit Committee delegated to Berkshire’s audit committee authority to engage an independent registered public accounting firm to audit Wesco’s consolidated financial statements, as well as the authority to pre-approve other audit and non-audit services for Wesco. Berkshire’s audit committee adopted a pre-approval policy on May 5, 2003. The policy requires that Berkshire’s audit committee pre-approve all services the independent registered public accounting firm provides, including audit services, audit-related services, tax and other services. Some services have a general pre-approval. The term of any general pre-approval is 12 months from the date of pre-approval, unless the audit committee considers a different period and states otherwise. Berkshire’s audit committee will annually review and pre-approve the services that may be provided by the independent registered public accounting firm without obtaining specific pre-approval. Berkshire’s audit committee will revise the list of general pre-approved services from time to time, based on subsequent determinations. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval by Berkshire’s audit committee. Wesco has been informed that all services performed by Deloitte in 2005 were pre-approved in accordance with the pre-approval policy adopted by Berkshire’s audit committee.

AUDIT COMMITTEE REPORT*

      Wesco’s Audit Committee (the “Committee”) operates pursuant to a written charter (“Charter”) providing for the Committee to assist the Board in fulfilling its oversight responsibilities by performing, among other things, the following functions: monitoring the integrity of the financial reporting process and internal controls; monitoring the independence and performance of the independent registered public accounting firm; and facilitating communication between the Board, management and the independent registered public accounting firm. The Charter was attached as an appendix to the proxy statement for the 2004 annual meeting of Wesco shareholders, which can be accessed through Wesco’s website (www.wescofinancial.com).

      In performing its functions for the year ended December 31, 2005, the Committee completed a number of procedures, including those specified in the Charter. In particular, the Committee:

      Based upon the reviews and discussions referred to above, and the report of Deloitte, the Committee recommended to the Board that Wesco’s audited consolidated financial statements for 2005 be included in its annual report to shareholders and its annual report to the SEC on Form 10-K, and the Board concurred.

OTHER MATTERS

      As far as Wesco is aware, there are no matters to be brought before the May 11, 2006 annual meeting other than the election of Directors. Should any other matters come before the meeting, action will be taken thereon by the persons appointed as proxies on the accompanying form of proxy, or their substitutes, according to their discretion.

PROPOSALS OF SHAREHOLDERS FOR 2007 ANNUAL MEETING

      Any shareholder proposal intended to be considered for inclusion in the proxy statement for presentation at the annual meeting of shareholders expected to be held in May 2007 (the “2007 annual meeting”) must be received by Wesco by December 4, 2006. The proposal must be in accordance with the provisions of Rule 14a-8 promulgated by the SEC under the Securities Exchange Act. It is suggested the proposal be submitted by certified mail, return receipt requested. Shareholders intending to present proposals at the 2007 annual meeting without having the proposals included in the proxy statement must notify Wesco of such intentions before February 13, 2007. After such date, Wesco’s proxy in connection with the 2007 annual meeting of shareholders may confer discretionary authority on the Board to vote on any such proposals. In addition, Wesco reserves the right, through its directors, officers or proxies, to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with the applicable deadline and other requirements.

AVAILABLE INFORMATION

      Wesco has mailed its combined printed annual report and Form 10-K for the year 2005 to shareholders of record as of March 15, 2006. The exhibits to that report will be provided upon request and payment of copying charges. Requests for the exhibits or additional copies of the combined report should be directed to Margery A. Patrick, Secretary, Wesco Financial Corporation, 301 East Colorado Boulevard, Suite 300, Pasadena, California 91101-1901. Wesco’s combined printed annual report and Form 10-K may be accessed through Wesco’s website, www.wescofinancial.com, and portions that have been electronically filed with the SEC are available through the SEC’s website at www.sec.gov.

* * * * *

Pasadena, California

March 30, 2006

Directions to Annual Meeting

       Meeting — The annual shareholders’ meeting of Wesco Financial Corporation will be held at the Hilton Pasadena, 168 South Los Robles Avenue (corner of Cordova Street), in Pasadena, California, at 2:00 p.m., on Thursday, May 11, 2006.

       Parking — The Hilton’s adjoining parking structure may be accessed from Cordova Street, which runs east-west to the south of the hotel.

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