contractual obligations which, at June 30, 2009, were essentially unchanged from the $142.2 million included in the table of off-balance sheet arrangements and contractual obligations appearing on page 32 of Wesco's 2008 10-K.
Wesco's shareholders' equity at June 30, 2009 was $2.3 billion ($328.56 per share), down $38.4 million from the $2.4 billion ($333.96 per share) reported at December 31, 2008, but up $221.6 million during the second quarter. Wesco carries its investments on its consolidated balance sheet at fair value, with net unrealized appreciation or depreciation included as a component of shareholders' equity, net of deferred taxes, without being reflected in earnings. The decrease in shareholders' equity for the six-month period, as well as the increase in the figure for the second quarter, reflected principally the fluctuations in fair values of Wesco's equity investments since yearend 2008. Because unrealized appreciation or depreciation is recorded based upon market quotations and, in some cases, upon other inputs that are affected by economic and market conditions as of the balance sheet date, gains or losses ultimately realized upon sale of investments could differ substantially from unrealized appreciation or depreciation recorded on the balance sheet at any given time.
In response to the crises in the financial and capital markets and the global recession, the U.S. and other governments around the world are taking measures to stabilize financial institutions, regulate markets and stimulate economic activity. While management hopes such actions will prove successful, the potential impact on Wesco is not clear at this time. It is expected that the current economic conditions will persist at least through 2009 before meaningful improvements become evident. Wesco's subsidiaries have taken and will continue to take cost-reduction actions to manage through the current economic situation.
RESULTS OF OPERATIONS
Wesco's reportable business segments are organized in a manner that reflects how Wesco's senior management views those business activities. Wesco's management views insurance businesses as possessing two distinct operations - underwriting and investing - and believes that "underwriting gain or loss" is an important measure of their financial performance. Underwriting gain or loss represents the simple arithmetic difference between the following line items appearing on the consolidated statement of income: (1) insurance premiums earned, less (2) insurance losses and loss adjustment expenses, and insurance underwriting expenses. Management's goal is to generate underwriting gains over the long term. Underwriting results are evaluated without allocation of investment income.
The condensed consolidated income statement appearing on page 5 has been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Revenues, including realized net investment gains, if any, are followed by costs and expenses, and a provision for income taxes, to arrive at net income. The following summary sets forth the after-tax contribution to GAAP net income of each business segment - insurance, furniture rental and industrial - as well as activities not considered related to such segments. Realized net investment gains, if any, are excluded from segment activities, consistent with the way Wesco's management views the business operations. (Amounts are in thousands, all after income tax effect.)

                                     Three Months Ended           Six Months Ended
                                   June 30,      June 30,      June 30,      June 30,
                                     2009          2008          2009          2008
       Insurance segment:
       Underwriting               $   (1,940 )   $     364     $   3,109     $   2,075
       Investment income              13,822        14,552        30,038        29,873
       Furniture rental segment        1,530         6,119           574         9,652
       Industrial segment               (285 )         599          (673 )         895
       Other                            (197 )         (61 )        (159 )        (205 )


       Consolidated net income    $   12,930     $  21,573     $  32,889     $  42,290

Insurance Segment
   The insurance segment comprises Wesco-Financial Insurance Company ("Wes-FIC")
and The Kansas Bankers Surety Company ("KBS"). Their operations are conducted or
supervised by wholly owned subsidiaries of Berkshire Hathaway Inc.
("Berkshire"), Wesco's ultimate parent company. Following is a summary of the
results of segment operations, which represents the combination of underwriting
results with dividend and interest income. (Amounts are in thousands.)

                                                  Three Months Ended                 Six Months Ended
                                              June 30,         June 30,         June 30,         June 30,
                                                2009             2008             2009             2008
Insurance premiums written -
Reinsurance                                   $  67,212        $ 106,796        $ 192,162        $ 187,975
Primary                                           2,250            5,262            5,062           11,188

Total                                         $  69,462        $ 112,058        $ 197,224        $ 199,163

Insurance premiums earned -
Reinsurance                                   $  74,286        $  65,027        $ 149,870        $  86,436
Primary                                           3,016            5,151            6,729           10,122

Total                                            77,302           70,178          156,599           96,558

Insurance losses, loss adjustment
expenses and underwriting expenses               80,286           69,619          151,815           93,366
Underwriting gain (loss), before income
taxes:
Reinsurance                                       ( 192 )         (1,094 )          7,446           (1,042 )
Primary                                          (2,792 )          1,653           (2,662 )          4,234

Total                                            (2,984 )            559            4,784            3,192
Income taxes                                     (1,044 )            195            1,675            1,117

Underwriting gain (loss), after taxes         $  (1,940 )      $     364        $   3,109        $   2,075

At June 30, 2009, in-force reinsurance business consisted of the participation in two distinctive arrangements with wholly owned subsidiaries of Berkshire. The first is a quota-share retrocession agreement with NICO to assume 2% part of NICO's 20% quota share reinsurance of Swiss Re incepting over the five-year period which began January 1, 2008, on the same terms as NICO's agreement with Swiss Re (the "Swiss Re contract"). The second is Wes-FIC's participation, since 2001, in aviation-related risks (hull, liability and workers' compensation) through aviation insurance pools, whose underwriting and claims are managed by United States Aviation Underwriters, Inc. (the "aviation business").

Contractual delays in reporting, and limitations in details reported, by the ceding companies necessitate that estimates be made of reinsurance premiums written and earned, as well as reinsurance losses and expenses. Under the Swiss Re contract, for example, estimates of premiums, claims and expenses are generally reported to NICO and Wes-FIC 45 days after the end of each quarterly period. Estimates are therefore made each reporting period by management for the activity not yet reported. Such estimates are developed by NICO based on information publicly available and adjusted for the impact of its, as well as Wes-FIC's management's, assessments of prevailing market conditions and other factors with respect to the underlying reinsured business. The relative importance of the Swiss Re contract to Wesco's results of operations causes those results to be particularly sensitive to this estimation process. However, increases or decreases in premiums earned as a result of the estimation process related to the reporting lag are typically substantially offset by related increases or decreases in claim and expense estimates. Periodic underwriting results can also be affected significantly by changes in estimates for unpaid losses and loss adjustment expenses, including amounts established for occurrences in prior years.
Written reinsurance premiums for the second quarter of 2009 included $56.7 million relating to the Swiss Re contract, versus $96.1 million for the second quarter of 2008. Inasmuch as the Swiss Re contract incepted as of the beginning of 2008, data for the first quarter of that year was based entirely on estimates determined from publicly available information related to periods prior to inception of the contract. When Swiss Re reported its actual first quarter data in the second quarter of 2008, Wes-FIC learned that a disproportionately large amount of Swiss Re's annual premiums are written in the first quarter, and recorded an adjustment in the second quarter to reflect the amount by which written premiums had been underestimated for the first quarter. By 2009, management had gained a year's working knowledge in projecting Swiss Re's written premiums under the contract, causing it to increase its estimate to a significantly higher amount of written premium volume for the first quarter of 2009 than it had estimated for the first quarter of 2008. Thus, written premiums under the contract for the second quarter of 2009 did not include as significant a "true up" as was required in the second quarter of 2008. Written reinsurance premiums under the Swiss Re contract for the first six months of 2009 were $173.6 million, 2.1% higher than those for the corresponding period of 2008. The increase in Swiss Re premiums for the 2009 period was the result of taking into account Swiss Re's published projection of additional premium growth for 2009 in development of the estimate of 2009 written premium volume, further adjusted with respect to the fluctuation of the value of the U.S. Dollar relative to the foreign currencies in which Swiss Re does a significant portion of its business. Written aviation-related reinsurance premiums were $10.5 million for the second quarter of 2009, a decrease of $0.3 million (2.3%) from the corresponding 2008 figure. For the first six months of 2009, written aviation-related reinsurance premiums of $18.6 million were $0.7 million (3.8%) higher than the corresponding 2008 figure. These fluctuations were attributed principally to premiums written by the workers' compensation pool. The aviation pool manager has purchased less hull and liability reinsurance in 2009 than in 2008, with the result that premium volume of those pools has remained relatively unchanged in the current year, in spite of increased competitive pressures.
Earned premiums under the Swiss Re contract were $65.2 million for the second quarter of 2009 and $53.4 million for the second quarter of 2008, and $131.7 million and $67.3 million for the respective six-month periods. These figures represent increases of $11.8 million (22.1%) for the second quarter and $64.4 million (95.6%) for the first six months of 2009 as compared with the corresponding 2008 figures. Earned premiums for a fiscal quarter typically include two components: (1) amortization of the portion of that quarter's written premiums relating to the insurance coverages provided during the period, and (2) amortization of unearned premiums as of the beginning of that quarter relating to the coverages provided during the quarter. Because the contract incepted as of the beginning of 2008, there were no unearned

premiums at inception to be amortized into earned revenues for the first quarter of 2008. By yearend, however, Wes-FIC had accumulated $82.1 million of unearned premiums, a portion of which was amortized into earned premium revenues during each of the 2009 periods. In addition, the volume of premiums written during the 2009 periods was slightly higher than in the comparable 2008 periods. Earned premiums of the aviation business were $9.1 million and $18.2 million for the second quarter and first six months of 2009 and $11.6 million and $19.1 million for the corresponding periods of 2008, declining $2.5 million (21.1%) and $0.9 million (4.7%), respectively, from period to period. These figures reflect not only the fluctuations in written premiums explained above, but the figure for the second quarter of 2008 also included an adjustment reflecting the amount by which earned premiums for earlier periods had been underestimated. Although the changes in estimated premiums affected the comparability of earned premiums from period to period, they did not significantly affect pre-tax or after-tax underwriting results.
Written primary insurance premiums decreased by $3.0 million (57.2%) for the second quarter and $6.1 million (54.8%) for the first six months of 2009 from those of the corresponding periods of 2008. Earned primary insurance premiums decreased by $2.1 million (41.5%) for the second quarter and $3.4 million (33.5%) for the six-month period. The decreases were attributable principally to KBS's decision late in 2008 to discontinue its bank deposit guarantee bond line of insurance, which insures deposits above FDIC limits for specific customers of mainly Midwestern banks, and which represented approximately half of KBS's premium volume for 2008. Wesco reported in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2008, that events in the banking industry, including a number of bank failures, had caused management to become less confident in the long-term profitability of this line of business. In September 2008, KBS notified its customers of its decision to exit this line of insurance as rapidly as feasible and stopped renewing bond coverages. In mid-November 2008, it began to issue 90-day notices of non-voluntary bond cancellation. As a result, the aggregate face amount of outstanding bonds has been reduced, from $9.7 billion at September 30, 2008, when 1,671 separate institutions were insured, to $1.0 billion, insuring deposits in 270 institutions, at June 30, 2009, and $0.6 billion, insuring deposits in 166 institutions as of July 31, 2009. KBS anticipates that outstanding deposit guaranty bonds will decline to approximately $106 million, insuring 34 institutions, by September 30, 2009; $50 million, insuring 21 institutions by December 31, 2009; $11 million deposited in three institutions by June 30, 2010; $3 million deposited in one institution by December 31, 2010, and zero, in July 2011.
KBS management maintains familiarity with its customers and endeavors to avoid insuring deposits of banks deemed to present unacceptable risks. In order to limit exposure to loss from deposit guarantee bonds, KBS management regularly updates its list ranking the banks it believes to be the 250 weakest in the nation based on data obtained from quarterly financial "Call" reports filed by all domestic banks with their banking regulators. Data by which banks are rated includes, capital to asset ratio, brokered deposits, loan to deposit ratio, loans to insiders, loan delinquencies and non-accruing loans. Procedures followed by KBS management with respect to customer banks whose names are on the list might include the issuance of 90-day notices of non-voluntary cancellation. As of July 31, 2009, of the 166 banks for which deposit guarantee bonds were outstanding, four banks, whose outstanding deposit guarantee bonds aggregated $23.2 million, were included on KBS's "watch" list. All four of those banks are believed to have adequate capital and liquidity to pose little danger of failure before the outstanding deposit guarantee bonds expire in August and September, 2009. KBS management believes that few of the institutions for which deposit guarantee bonds are outstanding, whose names are not included on its list of the weaker banks, are facing a significant risk of failure, and through policy limits and reinsurance, KBS has effectively limited its exposure per bank (or group of affiliated banks) to $7.6 million, after taxes.

In previous reports on Forms 10-K and 10-Q it was reported that that some portion of deposit guarantee losses KBS has incurred may eventually be recovered as the FDIC liquidates each failed bank's assets and distributes funds to the bank's creditors and owners of deposits in excess of FDIC insurance limits, including KBS (by right of subrogation). Early in the second quarter of 2009 KBS received $0.5 million in partial recovery of the loss of $4.7 million sustained in the third quarter of 2008. Additional recoveries, if any, with regard to that loss or others, will be recorded when received. As noted above, KBS has stopped writing coverage for excess bank deposits and is taking steps to lessen its exposure to losses from bank failures as rapidly as feasible.
Management believes that "underwriting gain or loss" is an important measure of the financial performance of an insurance company. Underwriting results of Wesco's insurance segment fluctuate from period to period and have generally been favorable. Wesco reported in its 10-Q for the first quarter of 2009 that underwriting results under the Swiss Re contract for the quarter had benefited by $6.0 million, before taxes, reflecting an adjustment in recognition of more favorable underwriting results reported by Swiss Re for calendar 2008 than had been reflected in Wes-FIC's estimate of Swiss Re's results under the contract during 2008. Swiss Re conducts a significant amount of its business in currencies other than the U.S. Dollar. Wes-FIC recognized pre-tax underwriting losses of $1.5 million under the Swiss Re contract for the second quarter of 2009 and $1.9 million, before taxes, under the contract, for the second quarter of 2008. The underwriting loss for the second quarter of 2009 reflected mainly the declining value of the U.S. Dollar relative to other currencies in which Swiss Re conducts its business. Wesco does not view these currency fluctuations as material to its arrangement under the contract and does not hedge against such fluctuations. The underwriting loss under the contract for the second quarter of 2008 resulted mainly from Wes-FIC's use of less favorable percentages for loss and expense reserving in the earlier year. Underwriting gains under the aviation-related reinsurance contracts were $1.4 million and $0.9 million, before taxes, for the quarters ended June 30, 2009 and 2008, and $3.1 million and $1.3 million, before taxes, for the six-month periods then ended. The frequency and severity of aviation-related losses tend to be volatile, and experience was more favorable during the 2009 periods than for those of 2008.
Primary insurance activities resulted in pre-tax underwriting losses of $2.8 million for the second quarter and $2.7 million for the first six months of 2009, versus underwriting gains of $1.6 million and $4.2 million, before taxes, for the respective 2008 periods. Not only had the line of deposit guarantee bonds been a source of underwriting gains in the year-earlier periods, but KBS operates with few employees and from modest facilities, thus limiting its ability to reduce operating and other expenses as a consequence of exiting the deposit guarantee bond line of insurance. Losses incurred by Wesco's insurance segment, by their very nature, fluctuate from period to period in both frequency and magnitude. Losses incurred by KBS in the first half of 2009 were significantly higher than those incurred in the first half of 2008. In the first six months of 2009, KBS recorded pre-tax losses of $4.2 million relating to two bank failures, including $3.2 million in the second quarter, less $0.5 million received from the FDIC in connection with a loss incurred in the third quarter of 2008, discussed above.
The profitability of any reinsurance or insurance arrangement is best assessed after all losses and expenses have been realized, perhaps many years after the coverage period, rather than for any given reporting period.

Following is a summary of investment income produced by Wesco's insurance segment (in thousands of dollars).

                                         Three Months Ended           Six Months Ended
                                       June 30,      June 30,      June 30,      June 30,
                                         2009          2008          2009          2008
    Investment income, before taxes   $   16,243     $  17,732     $  35,267     $  36,766
    Income taxes                           2,421         3,180         5,229         6,893

    Investment income, after taxes    $   13,822     $  14,552     $  30,038     $  29,873

Investment income of the insurance segment comprises dividends and interest earned principally from the investment of shareholder capital (including reinvested earnings) as well as float (principally premiums received before payment of related claims and expenses). In the latter part of 2008 Wesco invested $205 million, at cost, in shares of newly issued 10% cumulative perpetual preferred stock of The Goldman Sachs Group, Inc. in connection with an investment by other Berkshire subsidiaries. The amount had previously been invested principally in cash-equivalent investments with respect to which interest rates have been declining for more than one year. For the second quarter and first six months of 2009, dividend income increased by $1.1 million and $5.5 million, and interest income decreased by $2.6 million and $7.0 million, as compared with the components of investment income for the corresponding periods of 2008.
The income tax provisions, expressed as percentages of pre-tax investment income, shown in the foregoing table, amounted to 14.9% and 17.9% for the quarters ended June 30, 2009 and 2008, and 14.8% and 18.7% for the six-month periods then ended. The fluctuations in the percentages reflect the relation of dividend income, which is substantially exempt from income taxes, to interest income, which is fully taxable.
Management continues to seek to invest in the purchase of businesses and in long-term equity holdings.
Furniture Rental Segment
The furniture rental segment consists of CORT Business Services Corporation ("CORT"). Following is a summary of segment operating results. (Amounts are in

thousands.)

                                                      Three Months Ended                 Six Months Ended
                                                  June 30,         June 30,         June 30,         June 30,
                                                    2009             2008             2009             2008
Revenues:
Furniture rentals                                 $  81,365        $  87,827        $ 164,064        $ 168,543
Furniture sales                                      15,364           14,706           32,510           30,329
Service fees                                          2,048            2,756            3,397            4,197

Total revenues                                       98,777          105,289          199,971          203,069


Cost of rentals, sales and fees                      24,872           23,750           51,631           46,394
Selling, general and administrative expenses         71,268           70,875          147,149          139,710
Interest expense                                        205              412              460              939

                                                     96,345           95,037          199,240          187,043


Income before income taxes                            2,432           10,252              731           16,026
Income taxes                                            902            4,133              157            6,374

Segment net income                                $   1,530        $   6,119        $     574        $   9,652

. . .