The Liberal Democratic Party's second-largest faction, split Wednesday when 42 of its Diet members turned their backs on former LDP Secretary General Koichi Kato to form a new group.
The 34 Lower and eight Upper House members selected Mitsuo Horiuchi, a former trade and industry minister, as their leader.
Finance Minister Kiichi Miyazawa, a former head of Kochikai, assumed the post of supreme adviser, while former Prime Minister Zenko Suzuki, who no longer has Diet membership and is Miyazawa's predecessor as the head of the faction, became honorary chairman of the new group.