I was playing as custom race and went to war against the Terrans. Took 4 of their 7 planets, destroyed all their starbases and pretty much had fleets of 4 med hulls ships taking out anything they sent me. I went to talk to the leader, hoping to ask for peace before they surrendered to someone else as I couldn't press the attack past what I already had. Much to my suprise, the ai felt it was winning! It didn't take a single planet, never won a single battle and lost probably 60 ships to my 2. I looked on a screen and they still had a higer military rating than I did and I'm guessing that's what they consider winning. I really think the AI needs to factor in some other things beside military rating or the military rating needs to be changed. My tactics were higher, my ships faster and more powerful than the small and tiny hull ships they kept sending at me.