UPDATE 1-AIA Group's 2018 value of new business rises 22 pct, beats forecasts

(Adds context on AIA and its results)

HONG KONG, March 15 (Reuters) - AIA Group Ltd, the world’s second-largest life insurer by market value, posted a 22 percent increase in its 2018 new business value, boosted by expansion in China and surging demand for insurance in Hong Kong, its home market.

AIA’s value of new business, which measures expected profits from new premiums and is a key gauge for future growth, rose to $3.96 billion in 2018, up from $3.21 billion in 2017, the company said in a statement on Friday.

Analysts had expected Hong Kong-based AIA to post a 19 percent jump in value of new business to $3.83 billion, according to Refinitiv data.

China and Hong Kong together account for about half of new business growth globally at AIA, originally founded in Shanghai nearly 100 years ago and the first foreign insurer to be granted a licence in China.

The insurer last month got regulatory approval to expand in the northeastern Chinese cities of Tianjin and Shijiazhuang, amid Beijing’s broader agenda to open up its financial sector to greater foreign participation.

The company’s annualised new premium posted growth of 15 percent, to $6.51 billion in the year from 2017, while operating profit after tax rose 13 percent, to $5.30 billion, the statement showed.

The value of new business in Hong Kong, its key market, rose 24 percent to $1.71 billion.

The company also declared a special dividend of 9.50 Hong Kong cents per share and upped its final dividend payout by 14 percent.

Hong Kong is home to a developed life insurance market, with a life and health insurance premium to GDP ratio of 17.94 percent in 2017, the second-highest in Asia after Taiwan, according to insurer Swiss Re.

Life insurers in the former British colony also benefit from strong demand from customers in mainland China, with many looking for better products outside their home market and overseas investment opportunities. (Reporting by Sumeet Chatterjee in Hong Kong and Ambar Warrick in Bengaluru; editing by Chris Reese and Leslie Adler)