UPDATE 1-AIA reports worse-than-expected drop in new business value on pandemic hit

(Adds details on results, background)

March 12 (Reuters) - Insurer AIA Group Ltd on Friday reported a worse-than-expected drop in full-year new business value, weighed by lower demand for new policies during the COVID-19 pandemic.

Insurers globally have been hit by pandemic-related claims for travel, business interruption and event cancellations as well as reduced demand for life insurance policies due to the economic slowdown.

In Asia, insurance firms mainly rely on their army of agents for product sales, which have been dented by lockdowns and social distancing measures put in place by various countries to contain the pandemic.

AIA’s value of new business (VONB), which measures expected profits from new premiums and is a key gauge for future growth, fell to $2.77 billion in 2020 from $4.15 billion a year earlier, its first annual fall since its 2010 listing in Hong Kong

Analysts were estimating VONB of $3.04 billion, according to Refinitiv data.

The company said sales momentum had recovered this year as restrictions on movement were eased in its key Asian markets, leading to a 15% jump in VONB in the first two months of 2021.

However, last year, the number of visitors to Hong Kong from mainland China dropped 94%, according to the Hong Kong Tourism Board.

That contributed to the value of AIA’s new business in Hong Kong in 2020 slumping 66% to $550 million. (Reporting by Alun John in Hong Kong and Shashwat Awasthi in Bengaluru; Editing by Amy Caren Daniel)