If the nerve cell body itself is damaged then the nerve will probably die. But if one of it’s endings is damaged then it will usually regenerate that ending. If the nerve dies and the area it supplies is not scarred then neighbouring nerves might move in and try to grow new endings there but your body will need some time to train itself to recognise this. Sometimes the outcome can be weird e.g. Sensation coming from region A is analyzed by the brain as coming from region B.
If you grow new skin without scar tissue then existing nerves are likely to innervate the new skin. Most of the sensation from the penis comes from the glans anyway and PE exercises enlarge the shaft more than the glans in general. Even if the glans does grow significantly there’s no reason for sensitivity to drop as the nerve endings for pressure and friction are close to the surface anyway and I reckon they don’t get trapped or embedded as the chambers holding blood enlarge or new glans tissue is formed.
Reduced sensitivity in the glans will probably come from scarring due to injury or formation of a tough keratinizing layer (in circumcised men) like skin but even this is debatable as many men who have been circumcised as adults will tell you.
Also, the sensitivity of the penis itself from one session to another is quite unpredictable.