Yes, it looks like they very much fancy keeping the ships they capture.
If nobody eliminates the Pirates (and this happens often, the AI just provides them ships), by 1750 they can become quite a naval super-power. I had 2 full stacks after me in my last campaign - and there were several other smaller stacks or single ships roaming around. Managed to defeat one of those big stacks with my 6 3rd rates - it was 80% galleons, full firepower, the rest fluyts and one brig (the darn brig didn't explode, as I hoped). Jeez, those galleons are tough. Lost one of my warships.
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