What happened

On Thursday, Voya Financial (NYSE:VOYA) announced its plans to sell virtually all of its Closed Block Variable Annuity (CBVA) business as well as its individual fixed and fixed indexed annuity business.

The stock climbed higher on the day after the announcement, and was up by approximately 11% as of 3:20 p.m. EST.

A digital stock chart rising.

Image source: Getty Images.

So what

There are a couple of notable positive factors for investors here. For one, it reduces risk. The CBVA business was seen as one of Voya's riskiest components, and this transaction gets rid of the risk.

In a press release, Voya's CEO Rodney O. Martin, Jr. said, "Through this transaction, we are further demonstrating our commitment to delivering shareholder value by eliminating the risk associated with the CBVA segment and securing significant value for our Annuities business."

In addition, this adds financial flexibility to Voya. The company estimates that the sales will result in about $1.1 billion in value, $500 of which the company claims will be "immediately deployable." Voya intends to use the deployable portion to ramp up its share buybacks. The company currently has a $1 billion buyback authorization, and it intends to use this to buy back shares beyond this amount.

Now what

This move allows Voya to focus on its core businesses of retirement, investment management, and employee benefits. In fact, after the deal closes, Voya estimates that 80% of its earnings will come from these three segments.

Because of the sales, Voya expects between $110 million and $130 million in cost savings over the first 12 months following the close of the sale, and anticipates significant EPS growth as a result.

Matthew Frankel has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.