Insigne was being linked with Maurizio Sarri's Lazio this month, but has now committed to Pescara.
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The veteran played for Sarri at Napoli before leaving for Toronto FC in 2022.
Insigne has now signed with Pescara for the rest of this season.
The 34-year-old was on loan at Pescara in the 2011/2012 season. He scored 18 goals and provided 14 assists in 37 league games then.
Pescara is last in Serie B after 21 rounds.