The City gods do have a sense of irony. Prudential, Britain's most venerable insurer and a traditional long-only investment house, yesterday announced that it had chosen a hedge fund manager as its new chairman.

Harvey McGrath, who is 55 and operated for 27 years a driving force behind Man Group's extraordinary rise, is to join the Pru board on September 1 and will succeed Sir David Clementi as chairman on January 1.

Under Mr McGrath's leadership, as chief executive and then as chairman until his retirement last year, Man mushroomed, snaffling clients from long-only investment houses, such as Pru, that clung to a more traditional investment policy.

Mr McGrath, Belfast-born and Cambridge-educated, began his career with Chase Manhattan Bank in London and New York and joined Man as treasurer in 1980, when it was a tiny sugar-trading firm.

He later became finance director and for a while ran its (now demerged) brokerage business, Man Financial. Today Man is worth £9 billion and manages £40 billion for institutional investors and rich individuals.

Pru's chairmanship, which carries a £500,000 salary and a good prospect of a knighthood at the end of it, has long been seen as a plum post in the City.

Although Sir David got off to a difficult start when he took over in 2002, announcing a humiliating £1 billion rights issue and then dismissing the chief executive, Jonathan Bloomer, Pru has since sailed into calmer waters.

Mr McGrath might not have got the job at all. Pru is understood to have been lining up Sir Win Bischoff, a non-executive director, to take the chair before Citigroup imploded and asked Sir Win to take the executive chairmanship there.

The headhunting was handled by Whitehead Mann, and Pru's board is thought to have been impressed by Mr McGrath's financial services experience and his international breadth.

Mr McGrath, whose wealth is estimated at £150 million, has largely eschewed private sector non-executive directorships since leaving Man, favouring more worthy roles in charities and regeneration quangos.

He is chairman of the London Development Agency, which co-ordinates regeneration in the capital, and vice-chairman of the London Skills and Employment Board, the training quango.