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July 28 (Reuters) - AIA Group Ltd, the world's third-largest life insurer by market value, posted a 42 percent surge in new business for the first half of the year, helped by robust sales growth in its main markets, Hong Kong and China.

AIA's value of new business, which measures expected profits from new premiums and is a key gauge for future growth, surged to $1.75 billion in the half-yearly period that ends in May, up from $1.26 billion a year ago, the company said.

The insurer's operating profit after tax rose 16 percent in the first half to $2.26 billion, up from $1.96 billion in the year-ago period, AIA said in a statement to the stock exchange on Friday.

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

AIA, which listed in Hong Kong in 2010 after a spin-off from bailed-out U.S. insurer AIG, said Hong Kong delivered new business growth of 54 percent from the year-ago period to $828 million in first half of 2017.

The company's China business posted growth of 65 percent in new business, to $434 million.

Besides China and Hong Kong, the insurer does business in Asia in Thailand, Singapore, Malaysia and South Korea.

Asia is a battleground for insurers such as AIA, Sun Life Financial and a host of local players attracted by the region's lower insurance penetration levels and faster growth rates for insurance premiums than in the Western markets. (Reporting by Susan Mathew in Bengaluru and Sumeet Chatterjee in Hong Kong; Editing by Shounak Dasgupta and Dan Grebler)