My go-to is a three step process. The first insult goes unheard, the second goes one of three ways. If the insult is minor, in case they're "ribbing" I'll give the benefit of the doubt and give a shrug or other "I know I'm weird, but I like it that way" sort of response. If the insult is severe or out-and-out malicious, I'll give a very muted, unemotional response, like "uh huh..." Or "glad you think so..."

If they go for a third to get a rise out of you, go for the throat. Make direct, fierce, and very forced eye contact. Completely face them. If you know them, you could opt to make a very grave, personal insult on something that you know will cut them deeply, but it must be acurate and not at all overstated. I don't use that approach anymore, but instead the better option is to call them out within earshot of others. Show the anger on your face but show none in your voice. "Does anyone else feel like this guy likes being a prick? Does anyone else think he's cool because he's an asshole?" Draw eyes. Call out his name. Ask if anyone else thinks he's a bully. Put the spotlight on him without drawing on any direct insult.