blizzrd
Micromanager
It only counts militarily?
Yes. As for other civs' UHV requirements which similarly require you to not lose a city, losing a city means when another unit (AI civ, independent, native or barbarian) walks into (or razes) one of your cities. Losing cities to independence, conferences, spawns, respawns or even liberating your own cities does not cause you to fail the UHV criterion.
I think you'll have to get over this whole "is this a bug" thing though...