Mr Manduca has been appointed for a three-year term and will be paid £600,000 a year.

He has already been working as an independent non-executive director of Prudential since October 2010, becoming senior independent director in January 2011.

He has previously worked as chairman of Aon UK, global chief executive of Rothschild Asset Management and founding chief executive of Threadneedle Asset Management.

Mr McGrath announced his intent to depart from the role in December 2011 after three years.

Mr Manduca initially chaired the nomination committee for Mr McGrath’s replacement before being nominated himself after which Lord Turnbull took over the committee role.

Tidjane Thiam, group chief executive of Prudential, said: “I am delighted that Paul has accepted the position of chairman of Prudential and very much look forward to working with him. His talents, abilities and judgements will be great assets.”

Mr Manduca said: “I am truly excited about the future and am looking forward to working with Tidjane to lead Prudential towards continued commercial and financial success.”

A replacement senior independent director for Mr Manduca will be announced soon.