Andrew Devis takes a quick look at making a light wrap effect in After Effects using set matte and some blur. Check out the Creating A Simple Light Wrap In After Effects tutorial here.

from the tutorial description: In this first AE Lite Bite tutorial, Andrew Devis shows how to make a quick ‘light wrap’ effect for a keyed item so that the edge or alpha channel of the keyed item includes some of the pixels from the background element so that it starts to look as if the two items really belong together.