Prem Watsa, the head of Fairfax Financial Holdings and a well-known contrarian investor, said on Friday he is concerned about the global economy, pointing to record low bond yields and limited policy levers left in the hands of central bankers.

The company, whose equity investment exposure was nearly 90 percent hedged at the end of 2015, has now upped those bets. The firm has fully hedged its entire equity position by betting on declines in major indices like the Russell 2000 Index.

"We continue to be concerned about the prospects of the financial markets and the economies of North America and Western Europe," said Watsa on the company's quarterly conference call. "We see potential for major dislocations in the marketplace with many significant unintended consequences and we want to protect our company from them."

The Toronto-based financial services holding company, which reported its fourth quarter results late on Thursday, saw its shares close up C$3.50 at C$774 a share on Friday.

Watsa, a devotee of the value investing style favored by Warren Buffett, made billions for Fairfax by correctly calling the 2008 financial crisis.

He has since bet on a rebound in the Greek economy via a number of investments in the country. Watsa has also made bets that could pay out about $110 billion, if deflationary pressure increases in the United States and European Union over the next six or seven years.

"What we're trying to do is protect our company from worst case events, and deflation is a very difficult environment to make a return in," he said.

Although the market value of the derivatives has declined to $272.6 million, from the $656 million that Fairfax initially paid for them, Watsa is not concerned.

"As we keep saying to our shareholders it's a nine inning game and we might be in the third or fourth or fifth innings. It is not over yet."