a few suggestions...
1. more females, to spread the harassment around.
2. more dither fish (you didn't mention, so you may already have them) such
as rainbows, bigger bodied fish, something to break up the chase at times
3. more similar bodied, sized fish, to, as they call, "controlled
overcrowding" which is what malawis are actually used to...

Thanks for the suggestions. I think I will get a couple more females.

Also, now I suspect that the damage to the fins may not be due to
aggression, but because of some disease like fin rot. There is a lot
of red coloration at the base of the fins and the fins seems to be
shrinking. I am planning to use a salt bath as an anti-bacterial
remedy, as recommended by a book on fish diseases I have.

satyen