Prudential, the UK insurance giant, has appointed former hedge fund heavyweight Harvey McGrath as chairman, replacing Sir David Clementi, who will retire at the end of the year.

Prudential said it would pay Mr McGrath £500,000 a year from September 1 when he joins the group as non-executive director before taking the top seat at the boardroom table on January 1 next year.

Mr McGrath, who amassed a £172m fortune during his 27-year career at Man Group, the listed hedge fund manager, was ranked in 480th place on the Sunday Times Rich List this year.

The 56-year-old has a stake worth £152 million in Man Group, having sold £5 million shares last year before donating £4 million to Cambridge University to help recruit students from state schools.

He is a trustee of New Philanthropy Capital, a charity that advises the rich on how best to give away their wealth, interim chairman of the London Development Agency, and deputy chairman of the London Skills and Employment Board.

Mr McGrath worked for Man Group between 1980 to 2007, beginning as treasurer before becoming finance director, then president of Man in New York.

He was then appointed as chief executive of Man Group in London in 1990 and 10 years later became chairman, until leaving in 2007.

Commenting on his successor, Sir David said: "I am delighted that the board has appointed Harvey McGrath to assume the chair. His record of achievement in the international financial services arena is exceptional and his leadership skills are clear."

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